UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 
LIBRARY 


A 

CONCISE  TREATISE 


Law  of  Corporations 


HAVING   CAPITAL   STOCK 


MANUFACTURING    CORPORATIONS    AND    BUSINESS 
CORPORATIONS, 

Insurance  Companies,   Guaranty  Companies,  Banks,  Safe  Deposit 

Companies,  Trust  Companies,  Railroad  Companies,  Plank-Road 

Companies,  Gas-Light  Companies,  Bridge  Companies,  Telegraph 

Companies,    Navigation     Companies,    Building    Companies, 

Elevator  Companies,  Ferry  Companies,  Guano  Companies, 

Park  Associations,  Stage-Coach  Companies,  Homestead 

Companies,    Water-  Works  Companies,  Hotel 

Companies,   Pipe-Line   Companies, 

Trannvay  Companies, 

AND    THE 

RIGHTS  AND  LIABILITIES  OF  STOCKHOLDERS  AND 
OFFICERS. 


New  York  Cases  and  Statutes. 


CHARLES  TAPPAN   HAVILAND, 

0/  the  New   York  Bar. 


NEW    YORK : 

DIOSSY  AND   COMPANY, 

231    BROADWAY 
1800. 


tin 


QQ- 


Copyright,   1890, 

BY 

CHAS.  T.   HAV1LAND. 


2i 


PREFACE. 


THE  object  of  this  work  is  to  present,  in  a  concise  form, 
a  guide  to  all  the  general  laws  regulating  the  organization 
and  management  of  stock  corporations  in  the  State  of  New 
York. 

With  the  passage  of  the  Business  Act  in  1875,  and  the 
act  for  the  formation  of  safe-deposit  companies,  passed  the 
same  year,  it  became  possible  to  organize  a  corporation  under 
the  general  laws  for  any  purpose  except  that  of  transacting 
the  business  of  trust  companies.  This  omission  was  sup- 
plied in  1887  and  a  corporation  may  now  be  formed  under 
the  general  laws  for  the  purpose  of  carrying  on  any  lawful 
business. 

The  Manufacturing  Act  of  1848  and  the  Business  Act 
of  1875  are  the  ones  under  which  a  large  proportion  of  all 
the  corporations  of  this  state  are  organized,  and  these  acts 
consequently  receive  a  fuller  treatment  than  is  given  to 
others.  The  laws  pertaining  to  banks,  insurance  companies, 
railroads,  etc.,  are  considered  so  far  as  they  regulate  the  or- 
ganization and  management  of  corporations  formed  under 
them  as  corporations, — the  mass  of  rules  and  regulations  af- 
fecting such  companies  simply  as  transacting  the  business 
provided  for  in  the  above  acts  being  omitted. 

By  thus  limiting  the  scope  of  the  work,  it  becomes  pos- 
sible within  a  moderate  compass  to  consider  the  whole  body 
of  the  statute  law  of  this  state  affecting  corporations,  as 
such,  and  the  interpretation  which  the  courts  have  placed 
upon  such  statutes.  It  will  be  found,  by  arranging  the  sub- 
jects under  topical  headings,  that  the  laws  may  be  grouped 


iv  PREFACE. 

into  comparatively  few  classes.  Thus  the  Manufacturing 
Act  is  the  type  upon  which  many  of  the  later  acts  have  been 
formed,  while  many  of  the  provisions  of  the  Business  Act 
are  contained  in  others.  By  this  arrangement  repetition  is 
avoided  and  the  substance  of  the  different  laws  is  given, 
in  connection  with  the  decisions  construing  or  affecting  all 
statutes  of  a  similar  nature. 

The  liabilities  of  directors  and  trustees,  and  the  rights 
and  liabilities  of  stockholders,  are  subjects  of  the  greatest 
importance  to  every  one  bearing  such  relations  to  corpora- 
tions. These  rights  and  liabilities  are  almost  wholly  created 
by  statute,  and  consequently  are  but  slightly  touched  upon  in 
works  on  general  corporation  law,  or  in  those  which  treat  of 
the  general  liabilities  of  officers  and  stockholders.  The  en- 
deavor has  been  to  give  these  subjects  the  consideration 
their  importance  entitles  them  to,  and  to  set  forth  clearly 
and  concisely  the  rights  and  liabilities  of  stockholders  and 
officers  in  the  corporations  of  this  state,  as  fixed  by  the  stat- 
utes and  interpreted  by  the  courts. 

Other  subjects,  such  as  the  provisions  regulating  legal 
actions  and  proceedings,  taxation,  and  dissolution,  are  gen- 
erally governed  by  the  codes  and  the  statutes,  and  affect  all 
corporations  equally,  and,  therefore,  are  not  generally  in- 
cluded, at  any  length  in  works  treating  of  special  corpora- 
tions. 

While  avoiding  all  needless  repetition,  the  language  of  the 
statutes  has  been  followed  as  closely  as  possible,  and  in  ad- 
dition to  the  statements  of  the  law  in  the  body  of  the  work, 
the  acts  for  the  formation  of  manufacturing  corporations  and 
business  corporations,  and  the  franchise  tax  act  are  given  in 
full,  in  the  appendices. 

In  the  collection  of  cases  no  attempt  has  been  made  to 
multiply  citations,  but  rather  to  select,  so  far  as  possible 
from  the  latest  decisions  of  the  Court  of  Appeals,  those  cases 
which  establish  or  define  the  principles  of  the  law  governing 
corporations  or   construing  statutory  provisions ;    and  it  is 


PREFACE.  V 

believed  that  no  such  case  has  been  omitted.  When  neces- 
sary, however,  to  elucidate  or  explain  principles  so  estab- 
lished, and  upon  questions  that  have  not  been  passed  upon 
by  the  Court  of  Appeals,  the  decisions  of  the  lower  courts 
have  been  fully  cited. 

C.  T.  H. 

New  York,  June  10,  1S90. 


TABLE    OF    CONTENTS. 


CHAPTER   I. 

ORGANIZATION. 

Article  I. 
Man  ufacturing  Corporations . 

.  PAGE 

Organized  for  the  following  purposes: 

Manufacturing,  Mining,  etc 2 

Printing  and  Publishing 2 


Real  Estate  Business. 


3 


Dairy  Purposes 3 

Church  Sheds  and  Laundry  Purposes 3 

Slaughtering  Animals 3 

Towing 3 


Coal  and  Farm  Produce. 


3 


Hot  Water  and  Steam 3 

Cattle,  etc 3 

Raising  Vessels 3 

Collecting  and  Storing  Ice 3 

Mineral  Water 3 

Navigation  and  Salvage 4 

Floating  Elevators,  etc 4 

Skating  Rinks 4 

Agricultural  Purposes 4 

C  oal  and  Peat 4 

Residences,  etc 4 

Public  Hall 4 

Improving  Land,  etc 5 

Transporting  Oil,  etc 5 

Dredging  and  Dock  Building. ...    5 

Water  for  Mining,  etc 5 

Warehouses  and  Elevators ....  5 

Railway  Depots 5 

News- Agencies 5 

Water  for  Powers,  etc 5 

Method  of  Organization 6 


TABLE   OF   CONTENTS.  vii 
Article  II. 

PAGE 

Business  Corporations.  8 

Article  III. 

Insurance'  and  Guarantee  Companies . 

Subdivision  I.  Marine-Insurance  Companies 12 

Subdivision  2.   Fire  and  Inland  Navigation  and  Transportation  Insur- 
ance Companies '. 14 

Subdivision  3.  Life,    Health,  and    Casualty  Insurance,   Guarantee    and 

Indemnity  Companies 15 

Subdivision  4.  Title-Guarantee  Companies 18 

Subdivisions.  Credit,  Guarantee,  and  Indemnity  Companies 20 

Article  IV. 

Banking,  Safe  Deposit,  and  Trust  Companies . 

Subdivision  1.   Banks 21 

Subdivision  2.  Safe  Deposit  Companies 23 

Subdivision  3.  Trust  Companies 24 

Article  V. 

Railroad  and  Construction  Companies. 

Subdivision  1.    Domestic  Railroads 29 

Subdivision  2.   Foreign  Railroads 31 

Article  VI. 

Miscellaneous  Corporations. 

Plank-Road  and  Turnpike  Companies 34 

Gas-Light  Companies 34 

Bridge  Companies 34 

Telegraph  Companies. 35 

Navigation  Companies 36 

Building  and  Elevator  Companies 36 

Ferry  Companies 37 

Inland  Navigation  Companies   37 

Guano  Companies 3S 

Skating  Parks  and  Sporting  Grounds 3S 

Stage-Coach  Companies 39 

Driving  Park  and  Agricultural  Associations 39 

Homestead  Corporations 40 

Water  Works  Companies 40 

Railroad  Supply  Companies 41 

Hotel  Companies 42 

Pipe- Line  Companies 42 

Tramway  Companies „ 43 


Vlll  TABLE   OF   CONTENTS. 

Article  VII. 
General  Provisions. 

PAGE 

Amending  Certificate , .. .  44 

Filing  and  Recording  Certificate 44 

Organization  Tax 45 

The  Corporate  Name , 46 

Forfeiture  for  Non-User.    , 47 

The  Choice  of  Laws  under  which  to  Organize 47 

CHAPTER    II. 
POWERS  AND  PRIVILEGES. 

Article  I. 
General  Powers  and  Privileges. 

General  Powers 40, 

In  what  Corporations  to  Vest 50 

What  Other  Powers  to  be  Possessed    50 

Corporate  Name „ 50 


Duration. 


50 


Extending  Term  of  Existence 51 

Manufacturing  Corporations 51 

Business  Corporations 51 

Banks ., 51 

Turnpike  and  Plank-Road  Companies 52 

Extending  Term  of  Existence.     Generally 52 

The  Corporate  Seal 53 

The  Right  to  Hold  Real  Estate 53 

Lands  in  Other  States  or  Countries 53 

Adjacent  Lands   54 

The  Right  to  Hold  Stock  of  Other  Companies 54 

Manufacturing  Companies 54 

Insurance  and  Guarantee  Companies 55 


Railroads. 


55 


Pipe  Line  Companies ....    55 

Stock  of  Foreign  Corporations 56 

The  Right  to  Appoint  Officers 56 

By-Laws 57 

Who  Authorized  to  Make  By-Laws 58 

What  the  By-Laws  must  Provide 58 

How  Amended 59 

Certain  By-Laws  to  be  Published 60 

Article  II. 

Incidental  Potvers  and  Privileges, 

Special  Provisions  Regulating  Mortgages 61 

Manufacturing  Corporations 61 


TABLE   OF   CONTENTS.  IX 

PAGE 

Business  Corporations 63 

Building  Companies 63 

Gas-light  Companies 64 

Railroads 64 

Mortgages  to  Secure  Future  Advances 65 

The  Assent  of  the  Stockholders 65 

Filing  Assent  where  Real  Estate  is  out  of  the  State 67 

Failure  to  File  Assent °7 

Article  III. 
Special  Porvers  and  Privileges. 

Consolidation  of  Corporations 68 

Manufacturing  Corporations 6S 

Consolidation  of  Insurance  Companies 71 

Consolidation  of  Banks. 72 

Consolidation  of  Railroads. 74 

Consolidation  of  Telegraph  Companies 7° 

Rights  of  Creditors  on  Consolidation 7° 

Reorganization 77 

Reorganizations  as  "  Limited  Liability  Companies" ...  77 

Reorganization  under  the  Busine'ss  Act 79 

Reorganization  after  Foreclosure 81 

Same.      Railroads   83 

Reorganization  of  Plank-road  Companies 87 

Proceedings  for  the  Sale  of  Corporate. Real  Property 88 

Miscellaneous  Special  Powers  and  Privileges 90 

Changing  Place  of  Business.     Manufacturing  Act 90 

Same.     Business  Corporations 92 

Same.     Banks 92 

Change  of  Name 93 

Same.      Banks 95 

Same      Insurance  Companies. 96 

Changing  Number  of  Directors.      Manufacturing  Corporations 96 

Same.     Business  Act 97 

Same.     Insurance  Companies 9S 

Same.     Title-Guarantee  Companies 9S 

CHAPTER    III. 

THE   CAPITAL   STOCK. 

Stock  Issued  for  Property 100 

Under  the  Manufacturing  Act 101 

Under  the  Business  Act.  . 101 

Title  Guaranty  Companies 102 

Miscellaneous  Companies    102 

Preferred  Stock 102 

Change  of  Preferred  for  Common  Sjock 104 

Increasing  and  Decreasing  Capital  Stock 105 

Reducing  Capital  Stock 105 


X  TABLE    OF   CONTENTS. 

PAGE 

Increasing  Capital  Stock 10S 

Increase  and    Decrease  of   Capital    Stock  :    Gas-Light  Companies  and 

Navigation  Companies no 

Decreasing  Capital  Stock  of  Insurance  Companies in 

May  Increase  its  Capital  Stock 112 

Increase  of  Capital  Stock  by  Credit  Guaranty  Companies 113 

Increase  or  Decrease  of  Capital  Stock  by  Title  Guaranty  Companies. . .    114 

Reduction  of  Capital  Stock  by  Banks 114 

Reduction  of  Capital  Stock  by  other  Moneyed  Corporations 115 

May  Increase  their  Capital  Stock 115 

Increase  of  Capital  Stock  by  Safe-Deposit  Companies ...    117 

Increase  of  Capital  Stock  by  Railroad  Companies 117 

Increase  in  Case  of  Reorganization 11S 

Increase  and  Reduction  of  Capital  Stock  by  Companies  Organized  to 

Operate  Railroads  in  Foreign  Countries 11S 

Increase  of  Capital  Stock  by  Bridge  Companies 11S 

Increasing  and  Decreasing  Capital  Stock  by  Building  Companies 119 

Increasing  and  Decreasing  Capital  Stock  by  Business  Corporations. . . .    119 

Increasing  Capital  Stock  of  Ferry  Companies 120 

Increase  of  Capital  Stock  by  Driving-Park  Associations 120 

Increase  of  Capital  Stock  by  Pipe-Line  Companies 120 

Increase  of  Capital  Stock  by  Stage-Coach  Companies 122 

Increase  of  Capital  Stock  by  Telegraph  Companies 122 

Increase  of  Capital  Stock  by  Turnpike  Companies 122 

Increasing  and  Decreasing  Capital  Stock  by  Water-Works  Companies..   122 

Stock  Certificates  and  Transfers  of  Stock 123 

Under  the  Manufacturing  Act 124 

Same.     Business  Corporations 125 

Title  Guaranty  Companies .- 127 

Railroads 12S 

Banks 128 

Safe  Deposit  Companies 128 

Miscellaneous  Corporations 129 

CHAPTER    IV. 

THE  DUTIES  OF  OFFICERS  AND  DIRECTORS. 

Article  I. 
Acts  Required. 

Reports 130 

Reports  of  Manufacturing  Corporation 130 

How  Executed 131 

Form  of  Report 13? 

When  Report  must  be  Made , 133 

Publishing  and  Filing 134 

Certificate  of  Payment  of  Stock 135 

Reports  of  Business  Corporations 136 

Certificate  of  Payment  of  Stock , 137 


TABLE   OF   CONTENTS.  XI 

PAGE 

Reports  of  Marine  Insurance  Companies 137 

Reports  of  Fire  and  Inland  Navigation  Insurance  Companies 138 

Reports  of  Life,  Health,  and  Casualty  Insurance  Companies 139 

Reports  of  Guaranty  Companies 14° 

Reports  of  Banks 141 

Reports  of  Safe  Deposit  Companies 143 

Reports  of  Trust  Companies 143 

Reports  of  Railroad  Companies M4 

Reports  of  Bridge  Companies 144 

Reports  of  Ferry  Companies 145 

Reports  of  Guano  Companies 146 

Reports  of  Inland  Navigation  Companies 146 

Reports  of  Skating-Park  Associations 147 

Reports  of  Driving-Park,  Park,  and  Agricultural  Associations.. 147 

Reports  of  Pipe-Line  Companies.     Monthly  Statements 147 

Same.     Annual  Reports 148 

Reports  of  Turnpike  and  Plank-Road  Companies 149 

Reports  of  Certain  Moneyed  Corporations 149 

Books  Required  to  be  Kept 15° 

Article  II. 
Acts  Prohibited. 

Banking  Povyers  Prohibited 152 

Certain  Transfers  Prohibited 153 

Transfers  by  Moneyed  Corporations 154 

CHAPTER   V. 
THE  LIABILITIES  OF  OFFICERS  AND  DIRECTORS. 

Liability  for  Withdrawing  Capital,  etc 158 

The  Same.     Of  Moneyed  Corporations   160 

The  Same.     Manufacturing  Corporations 161 

Construction  of  the  above  Statutes 162 

Loans  to  Stockholders  Prohibited 163 

Liability  for  Failure  to  make  Annual  Report 164 

Construction  of  the  Statute 165 

Pleadings  and  Proofs 169 

Liability  for  False  Reports  under  the  Manufacturing  Act 172 

Liability  under  the  Business  Act 176 

Liability  Independently  of  Statute 178 

Liability  for  Debts  in  Excess  of  Capital 178 

Liability  for  Debts  Generally 180 

Miscellaneous  Liabilities  and  Prohibitions 1S1 

CHAPTER    VI. 
THE  RIGHTS  OF  STOCKHOLDERS. 

Right  to  Certificate  of  Stock 188 

Compelling  Transfer 190 

Right  to  Dividends. ...    191 


Xll  TABLE   OF   CONTENTS. 

PAGE 

Right  to  Examine  Books ig2 

Rights  at  Elections 194 

The  Same.     Moneyed  Corporations 195 

The  Same.     Business  Corporations 198 

The  Same.     Title  Guaranty  Companies 199 

The  Same.     Safe  Deposit  Companies igg 

The  Same.     Railroads igg 

The  Same.     Generally 201 

CHAPTER   VII. 
THE  LIABILITIES  OF  STOCKHOLDERS. 

Under-  the  Manufacturing  Act 206 

Under  the  Business  Act 207 

Insurance  Companies 210 

Banks 210 

Safe  Deposit  Companies 211 

Trust  Companies 212 

Railroads 212 

Bridge  Companies 213 

Building  Companies 213 

Gas-Light  Companies 214 

Guano  Companies 214 

Hotel  Companies 215 

Navigation  Companies 215 

Inland  Navigation  Companies 216 

Park  Associations 217 

Pipe- Line  Companies 217 

Stage-Coach  Companies 217 

Telegraph  Companies 21S 

Turnpike  Companies 218 

Liability  on  Unpaid  Stock 219 

Liability  until  Capital  is  Paid  in 222 

A  Stockholder's  Defences 226 

Liability  to  Laborers,  etc 229 

CHAPTER  VIII. 
LEGAL  ACTIONS  AND  PROCEEDINGS. 

Jurisdiction  of  the  Courts 235 

Same.     Of  the  Supreme  Court 235 

Same.     Of  Superior  City  Courts 235 

Same.     Of  Superior  Court  of  Buffalo 237 

Same.     Of  City  Court  of  New  York 237 

Same.     Of  County  Courts 238 

Same.     Of  City  Court  of  Yonkers   238 

Same.     Of  Courts  of  Justices  and  District  Courts  of  New  York 238 

Same.     Of  Courts  of  Inferior  Jurisdiction  Generally 23S 

Service  of  Summons.  ...    239 


TABLE   OF   CONTENTS.  Xlll 

PAGB 

Same.     Justices' Courts 241 

Service  by  Publication 242 

Pleadings 243 

Verification  of  Pleadings 245 

Cannot  Plead  Usury 245 

Statute  of  Limitations 246 

Preparations  for  Trial 246 

Evidence ....  24S 

Provisional  Remedies,  Attachments 250 

Injunction 252 

Receivers 254 

Judgment  and  Execution 257 

CHAPTER    IX. 
TAX  A  TION. 

Article  I. 
Municipal  Taxation. 

Real  Estate 259 

Personal  Property 260 

Statements  Required 264 

Foreign  Corporations 265 

Shares  of  Stock 265 

Article  II. 
State  Taxation. 

Companies  Subject  to  the  Tax 267 

Determining  Valuation    . .    269 

Penalties 270 

Construction  of  the  Act 270 

Insurance  Companies " 272 

Railway,  Express,  and  Telegraph  Companies,  etc 273 

Penalties 275 

Fire  and  Marine  Insurance  Companies 278 

Banks 279 

CHAPTER    X. 

DISSOLUTION. 

Article  I. 
Voluntary  Dissolution. 

Contents  of  the  Petition 2S2 

Proceedings  upon  Application 2S4 

Transfers  Prohibited 287 


xiv  TABLE   OF   CONTENTS. 

Article  II. 
Involuntary  Dissolution.  PAGE 

Action  to  Procure  Dissolution   288 

May  Grant  an  Injunction  in  such  an  Action 289 

May  Appoint  a  Receiver 289 

Action  for  Sequestration  of  Property  of  Corporation 291 

Officers  and  Stockholders  may  be  made  Parties 292 

What  the  Judgment  must  Provide 293 

Judicial  Supervision  of  Corporations 294 

Action  to  Annul  a  Corporation 295 

General  Provisions  Applicable  to  the  above  Provisions 298 

When  Injunction  may  Issue 300 

Winding  up  Corporations  Dissolved  by  the  Legislature 301 

Article  III. 
Receivers. 

When  a  Receiver  will  be  Appointed 303 

All  Property  to  Vest  in  Receiver 304 

Attorney-General  May  Apply  for  the  Removal  of  a  Receiver 306 

Receivers  in  Voluntary  Proceedings  for  Dissolution 306 

Receivers  Appointed  in  Proceedings  for  Involuntary  Dissolution 311 

Receivers  of  Life  Insurance  Companies 312 

Receivers  of  Fire  and  Inland  Navigation  Insurance  Companies 315 

Reports  by  Receivers 3*6 

Compensation  of  Receivers 3*7 

Wages  of  Operatives  Preferred 3 1 8 

APPENDIX   A. 
THE  MANUFACTURING  ACT.  32I 

APPENDIX    B. 
THE  BUSINESS  ACT.  333 

APPENDIX   C. 
THE    TAX  FRANCHISE  ACT-  353 


APPENDIX    D. 

FORMS. 


307 


APPENDIX   E. 
LA  TEST  AMENDMENTS  OF  1890.  3%S 


TABLE   OF  CASES. 


Abbott  v.  American  Hard  Rub- 
ber Co 253 

Adams  v.  Mills 169 

Agate  v.  Sands 226 

Aikin  v.  Wasson 230 

Allen  v.  Clarke 167 

Alexander  v.  Caldwell 249,  250 

American  Insulator  Co.  v.  Bank- 
ers and  Merchants'  Tel.  Co. .    245 
American  Grocer  v.  Grocer  Pub- 
lishing Co 4° 

American  Silk  Works  v.  Salomon   101 

Anderson  v.  Speers 180 

Andrews  v.  Murray 165,  227 

Arthur  v.  Griswold 175 

Aspinwall  v.  Sacchi 226 

Attorney-General,  In  re  Appli- 
cation of 296 

Attorney-General    v.     Bank    of 

Niagara  295 

Attorney-General  v.  Continental 

Life  Ins.  Co 318 

Attorney-General    v.     Guardian 

Mutual  Life  Ins.  Co 234,  304 

Bank  of   Attica  v.   Manufactur- 
ers  and  Traders'  Bank 124 

Bank  of  Keokuk  v.  Pfeiffer 248 

Bank   of    Montreal    v.    Fidelity 

Nat.   Bank 252 

Barker,  Matter  of 202 

Barnes  v.  Brown 48,  15S 

Barnes  v.  Mobile   &   N.    W.    R. 

R.  Co 241 

Barry   v.    Merchants'  Exchange 

Co 100 

Bartlett  v.  Dre w 220,  224 


Beach   v.  Smith II,  222 

Belden  v.  Meeker 155 

Belmont  Branch  BankV.  Hodge,  245 

Belmont  v.  Erie  Railway  Co 253 

Bengston  v.  Thingvalla  Steam- 
ship Co  '. 244 

Bennett  v.  Leeds  Mfg.  Co 244 

Biglin,  Matter  of,  v.  Friendship 

Assoc 190 

Billings  v.  Robinson 221 

Billings  v.  Trask 164 

Black   River  and    Utica    R.    R. 

Co.  v.  Barnard 44 

Black  River  and  Utica  R.  R.  Co. 

v.  Clarke 1 1,  222 

Blake  v.  Griswold 100,  165,  171, 

174,  176,  227 

Blatchford  v.  Ross 253 

Boardman    v.     Lake    Shore    & 

Mich.  So.  R.  Co 76,  192,  246 

Bolen  v.  Crosby 131,  171 

Bonnell  v.  Griswold. ..  .132,  134,  165 
170,  172,  173,  1/4,  i"5.  227 

Booth  v.  Bunce 224 

Boyle  v.  Thurber 171 

Boughton  v.  Otis 166 

Boynton  v.  Andrews 100,  227 

Boynton  v.  Hatch   100 

Brackett  v.  Griswold.  ..171,  173,  174 
Bradley  r.  Albemarle  Fertilizing 

Co 247 

Brinkerhoff  i\  Bostwick 178 

Brisbane    v.    Del.,  Lack.  &   W. 

R.  R.   Co 191 

British   Com.    Life   Ins.   Co.    v. 

Commrs 265 

xv 


XVI 


TABLE    OF   CASES. 


Brookman  v.  Metcalf 156 

Brouwer  v,  Harbeck 157 

Brown  v.  A.  B.  C.  Fence  Co...   3:9 

Brown  v.  Smith 132 

Bruce  v.  Piatt 134,  166,  168,  170 

Buffalo,  etc.,  R.  R.  Co.  v.  Dud- 
ley  iSS,   220,  221 

Buffalo,   etc.,   R.  R.  Co.   v.   Su- 
pervisors     260 

Buffalo  &  Allegheny  R.  R.  Co. 

v.  Cary 45,  220,  221 

Buffalo  &  Jamestown  R.  R.  Co. 

v.  G-ifford 221 

Buffalo  and  State  Line  R.  R.  Co. 

v.   Supervisors 260 

Burrall  v.  Bushwick  R.  R.  Co..    100 

Burr  v.  Wilcox 220,  226 

Butler  v.  Smalley 135,  165,  176 

Butterworth  v.  Kennedy 161 

Butterworth  v.  O'Brien 162,  245 

Byrne  v.   N.   Y.  Brick  and   Ce- 
ment Co 290 

Cameron  v.  Seaman 135,  169 

Carpenter  v.  Black  Hawk  Gold 

Mining  Co 61,  65 

Carpenter  v.  New  York  &  N.  H. 

R-  R-Co 253 

Chamberlain  v.  Rochester  Seam- 
less Paper,  etc..  Co 281 

Chambers  v.  Lewis.  .  .  .170,  180,  224 

Chandler  v.  Hoag  168 

Chapman  v.  Chumar 230 

Chase  v.   Lord 6,  210,  224 

Chase  v.  Vanderbilt 76 

Chemical  Bank  v.  Colwell 168 

Childs  v.  Harris 241 

Childs  v.  Smith 45 

Christie  v.  Gage 53 

Cincinnati    Cooperage     Co.     v. 

O'Keefe 13.4 

City  of  N.  Y.  v.  Starin 254 

Clapp  v.  Wright 171 

Clark  v.  Acosta 164 

Clegg    v.    Chicago     Newspaper 


Union. 


243 

Cochran  v.  Weichers 222 

Coddington  v.  Gilbert 252 

Coffin  v.  Reynolds 230 


Coman  v.  Lakey 61 

Com.    Bank  of  Buffalo  v.  Kort- 

right i9o 

Commercial  Bank  of  Keokuk  v. 

Pfeiffer 243,  244 

Concordia      Savings     and     Aid 

Assoc,  v.  Read 244 

Corning^.    McCullough.  .  .  .179,  222 

Cornell  v.  Roach 131,  170 

Cotheai  v.  Brouwer 192 

Craw  v.  Easterly. 168 

Curtis  v.  Leavitt 61,  155,  157 

Cushman  v.  Thayer  Mfg.  Jewel- 
ry Co iqo 

Cutting  v.  Damerel 191 

Cuykendall  v.  Corning 223 

Dabney  v.  Stephens 249 

Davidsburgh    v.    Knickerbocker 


Life  Ins.  Co. 


239 

Dean  v.  De  Wolf 230 

De  Bost  v.  Albert  Palmer  Co.  ..  249 
Delaware    and    Hudson    Canal 

Co.,  Matter  of 48 

Deming  v,  Puleston 168,  227 

Denike  v.   N.   Y.   &  Rosendale 

Lime  and  Cement  Co 281 

Diamond  Match  Co  v.  Roeber. .   232 

Dorris  v.  Sweeney 220,  221 

Douglass  v.  Ireland 223,  227 

Driscoll  v.   West  Bradley,   etc., 

M.  Co 57,  58,  124,  125 

Duckworth  v.  Roach 171 

Duncomb  v.  N.  Y.,  Housatonic 

&  North.  R.  R.  Co 81,  158 

Dunlop  v.    Patterson   Fire    Ins. 

Co 252 

Duquesne  v.  Penn  Bank 234 

Dutcher  v.  Importers  and  Trad- 
ers' Natl.  Bank 154,  157 

East  River  Bank  v.  Rogers 244 

Easterly  v.  Barber 168,  171 

Eaton  v.  Aspinwall 220 

Eaton,  Cole  &  Burnham  Co.  v. 

Avery 249 

Edison    Electric    Light    Co.    v. 

New  Haven  Electric  Co 77 

E.   M.    Boynton    Saw    and    File 
Co.,  Matter  of 286 


TABLE   OF   CASKS. 


XVll 


Empire  City  Bank,  Matter  of...    226 

Ericsson  v.  Brown 230 

Ervin    v.    Oregon    Ry.  &    Nav. 

Co 233,  234 

Esmond  v.  Bullard 166,  169 

Excelsior    Grain   Binder    Co.  v. 

Stayner  10 

Excelsior  Petroleum  Co.   v.  La- 

cey 163.  I7S 

Farnsworth  v.  Wood.  .    223 

Feeny  v.  People's  Fire  Ins.  Co.  60 
Firemen's  Ins.  Co.,  Matter  of.  .  190 
First  Natl.  Bank  of  Northampton 

v.   Doying 243 

Fisk  v.  Potter 65 

Ford  v.  Binghamton    Hydraulic 

Power  Co 247 

Gadsen  v.  Woodward.. 171 

Garrison  v.  Howe..  134,  137,  166,  226 
Gibbs  v.  The  Queen   Insurance' 

Co 240 

Gillet  v.  Moody 155,  162 

Gillet  v.  Phillips 155 

Glens  Falls  Paper  Co.  v.  White  132 
Greason  v.    Goodwillie-Wyman 

Co 256 

Greenpoint   Sugar  Company  v. 

Whitin 66 

Gurney    v.   Atlantic    and    Great 

Western   R.  Co 318 

Hafner  &  Schoen  Furniture  Co. 

v.   Grumme 243 

Handy  v.  Draper 207,  223,  226 

Hardman  v.  Sage 228 

Hastings  v.  Drew 224,  225 

Hatch   v.  Attrill 177 

Hawes  v.  Gas  Consumers'  Ben- 
efit Co 191 

Heckmann  v.  Pinkney 4S 

Herring  v.  N.  Y.,  Lake  Erie  & 

\Y.  R.  R.  Co 2S9 

Hibernia    Natl.     Bank    v.     La- 
combe 232,   252 

Hill  v.  Newichawanick  Co 192 

Hill  v.  Spencer 230 

Hiller -'.  Burlington,  etc.,  R.  R. 

Co 240 

Hoag  v.  Lamont 172 


Holbrook  v.  N.  J.  Zinc  Co 190 

Hollingshead  v.  Woodward  .228,  291 

Hollister  Bank,  Matter  of 226 

Horner  v.  Henning 179 

Houghton  v.  McAuliff 156,  157 

Hovey  v.  Ten  Broeck 230 

Hoyle    v.   Pittsburgh   &    Mon- 
treal R.  R.  Co 64,  15S 

Hudson  River  Bridge  Co.  v.  Pat- 
terson     260 

Hughes     v.     Vermont     Copper 

MiningCo kji 

Huguenot  Natl.   Bank    v.  Stud- 
well 134 

Hun  v.  Cary 17S 

Huntington   v.  Attrill 177 

Hyatt  v.  Allen 191 

Importers  &  Grocers'  Exchange, 

In  re 2S7 

Irving  Natl.  Bank  v.  Corbett. .  .    243 
Isaacson    v.   N.  Y.   C.  &   H.   R. 

R.  R.  Co 249 

Ives  v.  Smith 1 .  .    253 

Jackson  v.  Twenty-third    Street 

Ry.  Co 190 

Tagger  Iron  Co.  v.  Walker 22S 

James  v.  Woodruff 125 

Jermain  v.  Lake  Shore  is;  Mich. 

So.  Ry.  Co 123,  191 

Johnson   v.  Underhill 191,  22S 

Jones  v.  Barlow.  ..134,  166,  170,  172 
Jones  v.  N.  Y.  Guaranty  and  In- 
demnity Co 65 

Kelley    v.    Woman     Publishing 

Co....      245 

Kelsey  v.  Pfaudler  Process  Co.,   192 
Kent  v.  Quicksilver  Mining  Co., 

57.  59.  61,  102 

Kincaid   v.   Dwindle,  222,    223,  225, 

231 ,  291 

Kindburg  v.  Mudgett 16S 

King  v.  Duncan 22S 

Kingsley  v.  First  Natl.  Bank  of 

Bath 153.  288 

Kirkland  v.  Kille 134,  169 

Knowles  v.  Duffy 227 

Knox  v.  Baldwin 171,  1S0,  223 

Kortright  v.  Buffalo  Com.  Bank,  190 


TABLE   OF   CASES. 


Kraft  v.  Coykendall i6g 

Krauser  v.  Ruckel 230,  231 

Lake    Ontario     Natl.     Bank    v. 

Onondaga  County  Bank 281 

Lake  Ontario,  etc.,  R.  R.  Co.  v. 

Mason 220 

Lake  Superior  Iron  Co.  v.  Drexel, 

roo,  227 
Landers  v.  Staten   Island   R.  R. 

Co 239 

Leavitt  v.  Blatchford 155 

Lee  &  Co.'s  Bank,  Matter  of...   221 
Legrand  v.  Manhattan  Mercan- 
tile Assoc      60 

Lehigh  Coal  &  Nav.  Co.  v.  Cen- 
tral R.  R.  of  N.  J 291 

Leonard  v.  Columbia  Steam  Nav. 

Co 233 

Lewis  v.  Armstrong 167 

Lombard  v.  Case 192 

Londriggan  v.   New  York  &  N. 

H.  R.  R.  Co 246 

Long  Island  R.  R.  Co.,  In  re,  60, 

124,  202 
Lord  v.  Yonkers  Fuel  Gas  Co.,  62,  65 

Lorillard  v.  Clyde 100 

Losee  v.  Bullard.  .  134,  167,  170,  171 

Lowry  v.  Inman • 224 

Mann  v.  Currie 221 

Mann  v.  Pentz 291 

Marine  Bank  v.  Clements 157 

Market    Natl.    Bank    v.    Pacific 

Natl.  Bank    234 

Martin  v.   Niagara   Falls  Paper 

Mfg.  Co 65 

Mathez  v.  Neidig 223,  226 

Mayor,  etc.,  v.   N.  Y.  &  Staten 

Island  Ferry .- .   252 

McBride  v.  The  Farmers'  Bank,  233 

McClave  v.  Thompson 179,  180 

McComb  v.  Kellogg 179 

McCormickw.  Penn.  Cent.  R.  R. 

Co 234 

McCulloch  v.  Norwood 303 

Mc Henry  v.  Jewett 203 

McKenna  v.  Edmundstone 48 

McLean  v.  Eastman 155 

McMahon  v.  Macy 166,  225 


McMahon,  Matter  of  Appln.  of, 

v.  Palmer 265 

McMaster  v.  Davidson 22S 

Medbury    v.     Rochester     Frear 

Stone  Co.  . .    289 

Mercantile    Natl.   Bank    v.  The 

Mayor 265 

Merchants'  Bank  v.  Bliss.  ..170,  171 
Merchants'  Bank  of  Watertown, 

Matter  of 211 

Merchants'  Natl.  Bank  v.  Hall.    249 

Merrick  v.  Van  Santvoord 234 

Metropolitan  Trust  Co.  v.  Tona- 

wanda  V.  &  C.  R.  R.  Co 31S 

Meton  &  Sons  v.  Isham  Wagon 

Co   245 

Miller  v.  White 166,  167,  225 

Mills  v.  Stewart 221 

Morey  v.  Ford 171 

Morgan  v.  Skiddy 17S 

Morrison  v.  Menhaden  Co 291 

Moss  v.  Averell 61 

Nassau  Bank  v.  Jones 54 

Nassau  Gas  Light  Co.  v.  City  of 

Brooklyn 271 

National  Tube  Works  Co.  v.  Gil- 

fillan 227 

Natl.  Shoe   &  Leather  Bank  v. 

Mechanics' Natl.  Bank 252 

New  England  Iron  Co.  v.  Gil- 
bert El.  R.  Co 281 

NewYork,  Lack.  &  Westn.  R.  R. 

Co,  Matter  of  Petition  of.  .44,  244 
New  York  Cab  Co.  v.  Mooney,  46 
N.  Y.  Life  Ins.  Co.  v.  Universal 

Life  Ins.  Co 247 

N.  Y.   &    N.    H.    R.   R.    Co.   v. 

Schuyler 188,  191 

N.  Y.  &  Oswego  Midland  R.  R. 

Co.  v.  Van  Horn n,  222 

N.  Y.  State  Loan  &  Trust  Co.  v. 

Helmer " 152 

Niagara  Falls  Susp.  Bridge  Co. 

v.  Bachman 250 

North  Shore  Ferry  Co.,  Matter 

of 202 

Ogden  v.  Raymond 156,  157 

Olcott  v.  Tioga  R.  R.  Co 246 


TAELE  OF  CASES. 


xix 


Oldtown  &  Lincoln  R.  R.  Co.  v. 

Veazie 124 

Ormsby W.Vermont  Copper  Min- 
ing Co 58,  201 

Oswego  Starch  Factory  v.  Dollo- 

way 26i 

Pacific  Natl.  Bank  v.  Mixter...   252 

Palmer  v.  Pennsylvania  Co 241 

Palmer  v.  Phoenix  Mutual  Life 

Ins.  Co 233 

Parker  v.  Stroud 233 

Parrott  v.  Colby 228 

Pattersons.  Robinson 179,  180 

Paulding  v.  The  Chrome  Steel 

Co 154 

People  v.  Albany  Ins.  Co 275 

People    v.   Albany    &    Vermont 

R.  R.  Co 297 

People   v.   American    Bell   Tel. 

Co 272,  275 

People  v.  Ballard 295 

People  v.  Batchelor 202 

People  v.  Boston,  Hoosac  Tun- 
nel, etc.,  R.  Co 74,  297 

People  v.  Brandon 190 

People  v.  Brooklyn,  etc.,  R.Co.,  295 
People  v.  Equitable  Trust  Co., 

267,  274 
People  v.  Fire  Assoc,  of  Phila. .  234 
People  v.  Gold  and  Stock  Tel. 

Co 275 

People  v.  Home  Ins.  Co 267 

People  v.  Horn  Silver  Mining  Co., 

267,  272,  274 
People  v.  Hydrostatic  Paper  Co.,  294 
People  v.  Knickerbocker  Ice  Co.  271 

People  v.  Lowe 295 

People  v.  National  Fire  Ins.  Co.,  275 
People  v.  North  River  Sugar  Re- 
fining Co 297 

'People  v.   N.  .Y.   Floating   Dry- 
dock  Co   271 

People  v.  Parker 190 

People  v.  Remington.  .230,  318,  319 
People    v.   Seneca    Lake    Grape 

and  Wine  Co 2S6,  2S9 

People    v.    Spring   Valley    Hy- 
draulic Gold  Co 274 


People  v.  The    Gold  and  Stock 

Tel-  Co 267,  275 

People  v.  The  Mutual  Trust  Co.,    150 

People  v.  Throop 192 

People  v.  Troy  House  Co 47 

People  v.  Twaddell 202 

People  v.  Williamsburgh  Turn- 
pike, etc.,  Co 297 

People  ex  rel.  v.  Albany  Medi- 
cal College   202 

People  ex  rel.  v.  Asten 263 

People  ex  rel.  v.  Beach 6,  7,  S 

People  ex  rel.  v.  Carr 48,  107 

People  ex  rel.  v.  Cassity 260 

People  ex  rel.  v.  Coleman..  .261,  264 
People  ex  rel.  v.  Davenport.  .  ..   267 

People  ex  rel.  v.  Forrest 259 

People  ex  rel.  Gallatin  Natl.  Bank 

».  Commrs 266 

People  ex  rel.  v.  Lake  Shore  & 

Mich.  So.  R.  R.  Co 194 

People   ex  rel.   Manhattan    Fire 

Ins.  Co.  v.  Commrs 265 

People  ex  rel.  Mertens  v.  Cook, 

46,  S3 

People  ex  rel.  v.  McLean 265 

People  ex  rel.  Muller  v.  Asses- 
sors  260,  264 

People  ex  rel.   Mutual  Tel.  Co. 

v.  Commrs 265 

People  ex  rel.  v.  Newburgh,  etc., 

Plankroad  Co 79 

People    ex  rel.   N.   Y.    Elevated 

R.  R.  Co.  v.  Commrs 260 

People  ex  rel.  N.  Y.  &  Harlem 

R.  R.  Co.  v.   Commrs 260 

People  ex  rel.  Pacific  Mail  Steam- 
ship Co.  v.  Commrs 264 

People  ex  rel.  Panama  R.  R.  Co. 

v.  Commrs 261,  263,  264 

People  ex  rel.    Parker   Mills   v. 

Commrs 265 

People  ex  rel  Schurz  r\  Cook. . .  46 
People  ex  rel.  r.  Supervisors. . .  259 
People  ex  rel.  Tradesmen's  Natl. 

Bank  r.  Commrs 266 

People   ex   rel.    Trowbridge    v. 
Commrs....    265 


TABLE   OF   CASES. 


People     ex     rel.     Twenty-third 

Street  R.  R.  Co.  v.  Commrs.. 

261,  264 
People    ex    rel.    Van     Nest    v. 

Commrs 260,  264 

People  ex  rel.  Zulia  Steam  Nav. 

Co.  v.  Commrs 264 

Perry  7-.  Hoadly 221 

Petersen  v.  Chemical  Bank 233 

Pfohl  v.  Simpson 222,  224 

Phila.  &  Read.  Coal  &  Iron  Co. 

v.  Hotchkiss 169 

Phillips  v.  Therasson ■.  .  .   22S 

Phcenix  Bank  v.  Donnell 243 

Phoenix    Warehousing     Co.     v. 

Badger 220 

Pier  v.  George 171 

Pier  i'.  Hanmore 132,  133,  173 

Pilcher  v.  Brayton. 231 

Plimpton  v.  Bigelow 252 

Pope   v.    Terre     Haute    Car   & 

Mfg.  Co 233,  240 

Potter  v.  Bank  of  Ithaca 143 

Pratt  v.  Eaton 153 

Pratt  v.  Munson 85 

Pratt  v.  Short. 153 

Pringle  v.  Woohvorth 291 

Prouty  v.   Lake  Shore  &  Mich. 

So.    R.  R.  Co. 76 

Pyrolusite  Manganese  Co.,  Mat- 
ter of. .  .• 2S4 

Raisbeck  v.  Oesterricher 45 

Randall  v.  Havemeyer 225 

Rankine  v.  Elliott 220 

Rathbun  v.  Northern  Cent.  Ry. 

Co 246 

Raynor  v.  Pacific  Natl.  Bank.  .   252 

Reed  v.  Keese 169 

Rector,  etc.,   of  Trinity  Church 

v.  Vanderbilt 170,  171 

Reddington    v.   Mariposa  Land 

&  M.  Co 241 

Richardson  v.  Abendroth. .  .227,  231 

Roach  v.  Duckworth 166,  172 

Robinson  v.  Bank  of  Attica. . . . 

153.  154,  157 
Robinson  v.  Natl.  Bank  of  New 
Berne 191,  25 


Robinson  v.  Oceanic  Steam  Nav. 

Co 234,  239 

Rochester  Savings  Bank  v.  Av- 

erell .6,  66,  67 

Rodbourn  v.  Utica,  Ithaca  &  E. 

R.  Co 292 

Rorke  v.  Thomas. .  162,  166,  167,  171 

Rosa  v.  Butterfield 245 

Rutter  v.  Kilpatrick iSS 

Sage,  Matter  of 192,  194,  234 

Sagory  v.  Dubois 100 

Salem  Mill  Dam  Co.  v.  Ropes..  124 
Solomon  v.  The  American  Silk 

Works 101 

Sanborn  v.  Lefferts.  .  .  .131,  134,  171 

Sands  v.  Hill 2S8 

Santa  Eulalia  Silver  Mining  Co., 

Matter  of .' 283 

Schenck  v.  Andrews 101,  227 

Schenactady  &  S.  PI.  R.  Co.  v. 

Thatcher 221 

Shaler    <K:    Hall    Quarry  Co.    v. 

Bliss 168 

Sheldon  Hat  Blocking  M.  Co.  v. 

Eichemeyer 154 

Shellington  v.  Howland.  .  .  .223,  226 
Shorer  v.  Times  Print,  and  Pub. 

Co 247 

Short  v.  Medberry 230 

Small  v.  Herkimer  Mfg.  Co. . . .    221 

Smith  v.-  Mayor 260 

Sodus    Bay,  etc.    R.    R.  Co.   v. 

Hamlin 221 

South  Baptist  Society  v.  Clapp.  53 
Southern  Life  Ins.  Co.  v.  Packer  245 

Stephens  v.  Fox 225 

Sterett     v.     Denver     and     Rio 

Grande  R.  Co 241 

Stevens  v.  Phcenix   Ins.  Co.  .  .  .   234 

Stewart?'.  Bramhall   245 

Stokes  v.  Stickney 171,  173 

Story  v.  Furman 179 

Strong  v.  Smith.  .  .    202 

Sturges  v.  Vanderbilt 303 

Supervisors    of    Niagara  v.  The 

People 155 

Sutherland  v.  Olcott 105,  225 

Swords  v.  Northern  Light  Oil  Co.   289 


TABLE   OF   CASES. 


XXI 


Syracuse  Savings  Bank  v.  Syra- 
cuse   C.    &    N.   Y.    R.    R. 

Co 3°4 

Talmage  v.  Pell 155 

Tallmadge  v.  The    Fishkill  Iron 

Co 179 

Thomas  v.  Merchants'  Bank...    25S 

Thorp  v.  Woodhull 1 SS 

Thurston  v .  Duffy 227 

Torbett  v.  Eaton 177 

Tracy    v.    First    Natl.    Bank   of 

Selma 220 

Trask  v.  Peekskill  Plow  Works     70 

Tyng  v.  Clarke 169 

Union  Hotel  Co.  v.  Hersee.  .  .  .   221 
Union  Natl.  Bank  v.  Wheeler..   245 
Union  Steamboat  Co.  v.  Buffa- 
lo    261 

U.  S.  Trust  Co.  v.   N.   Y.  West 

Shore  &  B.  R.  Co 256,281, 

317,  3i3 

Vail  v.  Hamilton 66 

Vale    Allen    v.  Illinois  Cent.  R. 

R.  Co 18S 

Van  Amburgh  v.  Baker 168 

Van  Cott  v.  Van  Brunt 100,  228 

Van  Ingen  v.  Whitman 177 

Varnum  v.  Hart 153 

Vatable   v.    N.  Y.,  Lake  Erie  & 

W.  R.  R.  Co S6 

Veeder  v.  Baker 171,  176 


Veeder  v.   Mudgett 136,225 

Verplanck  v.  Mercantile  Ins.  Co  281 
Victory  Webb  Co.  v.  Beecher.  .  169 
Village  of  Gloversville  r'.  Howell     48 

Wakefield  v.  Fargo   229,  230 

Wakeman  v.  Dalley 17S 

Walton  v.  Coe 210 

Vv^arner  v.  Beers 155 

Waterbury,  In  re _ 

Weaver  v.  Barden 123,  125 

Weeks  v.  Love 223 

Western  Transportation  Co.  v. 

Sheu 261 

Wheeler  v.  Millar 220,  221, 

224,  225,  226 

Whitford  v.  Panama  R.  R.  Co.,   233 

WThitney  Arms  Co.  v.  Barlow.  .    131, 

T32.  !33.  if>5,  166,  169,  170,  172 

Whitney  v.  N.  Y.  &  Atlantic  R. 

R.  Co 257 

Whittakcr   v.    Masterton.  .  .  .  132,  133 

Whittlesey  r.  Frantz 245,  304 

Wiles  v.  Suydam 171,  222 

Williams  v.  Western  Union  Tel. 

Co 100 

Williamson  v.  Wadsworth   230 

Woerishoffer     v.     North     River 

Construction  Co 252,  290,  306 

Wood  v.  Wellington 156 

Woodruff,    etc.    Iron    Works  v. 

Chittenden 227 


NEW  YORK  REVISED  STATUTES   CITED. 


Revised 


Statutes,  part  i,  c 

hap.  xiii, 

"             "     I, 

"      xiii, 

"     i, 

"     xiii, 

"     i, 

"      xiii, 

"             "     i, 

"     xiii, 

n            a     -r 

"      xiii, 

"             "     i, 

"      xviii, 

"             "     i, 

"      xviii, 

"             "     i, 

"      xviii. 

"             "     i, 

"      xviii. 

"             "     i, 

"      xviii, 

"             "     I, 

"      xviii, 

"             "     i, 

"      xviii, 

"             "     i, 

"     xviii, 

it                         (€         i 

"     xviii, 

"                           "          I, 

"      xviii, 

"                           "          I, 

"     xviii, 

"                           "          I, 

"      xviii. 

"                           "I, 

"     xviii, 

"                          "         I, 

"      xviii, 

"                           "          I, 

"      xviii, 

"                           "          III 

"      viii, 

"                         "          III 

"      viii, 

"          III 

"      viii, 

"         III 

"      viii, 

"                          "          III 

"      viii, 

'*          III 

"      viii, 

"                          "          III 

"      viii, 

title  I,  §  1 259 

"  1,  §  3 260 

"  1, §7 265 

"  2,  §  6   •  - .   260 

"  4,  §  1 259 

"  4,  §2 264 

"  3 49 

"  3,  §  1 53.  232 

"  3, §3   6o 

*'  3-  §4 152 

'*  3,  §  5    2o6 

"  3-§7 47 

"  3,  §S 50 

"  4,  §1 !5i 

"  4»  §  2 105,  153 

"  4,§3 178 

"  4,  §4 x53 

"  4.  §  5 J95 

"  4,  §  6 60,  194 

"  4,  §  7 J94 

"  4,§S 195 

"  4.  Art.  2,    §  42 311 

"  4.     "      3.  ^§  66-71 307 

"  4,     "      3-§^  72-75 3oS 

"  4.     "      3,  §  77 3oS 

"  4.     "      3»^§  73-Si. 309 

"  4,     "      3.  £§  82-S6 310 

"  4.     "      3»  §§  37-S9 3" 

xxii 


SESSION    LAWS   CITED. 


LAWS 

iSlI, 

I8I5, 

I8I5, 

I8l6, 

lSl7, 

I82I, 

IS46, 

1847. 
I848, 

1848, 
I848, 
I848, 
IS48, 
I848, 
I848, 
IS4S, 
l848, 
I848, 
I84S, 
1848, 

IS4S, 
184s, 
1848, 
1848, 
1848, 
.  1848, 
1848, 
1848, 
1848, 
1848, 
1848, 
1S4S, 
1848, 
1848, 
1848, 
1848, 
T848, 
1848, 


CHAP. 

67 2 

47 2 

202 2 

5S 2 

223 2 

14 2 

155 47 

210 34,  122,  149,  151,  219 

37 34-  64,  no,  135,  162, 

165,  176,  214,  259 

40 1,  2,  45,  69,  163,  321 

40,  §  1 3,  53,  321 

40,  §  2 7,  61,  322 

40,  §3 322 

40,  §  4 323 

40,  §  5 323 

40,  §  6 125,  323 

40,  §7 324 

40,  §8 55,  124,  324 

40,  §  9 324 

40,  §  10 206,  324 

40,  §  11 136,  325 

40,  §  12.  . . .131,134,164,325 

40,  §  13 161,  326 

40,  §  14 101,  163,  326 

40,  §  15 172,  326 

40,  §  16 207,  327 

40,  §  17 327 

40,  §  iS 206,  327 

40,  §  19 327 

40,  §  20 109,  327 

40,  §  21 no,  328 

40,  §  22 no,  329 

4°,  §  23 179,  329 

40,  §  24  207,  329 

40,  §  25 151,  320 

40,  §  26 331 

40,  §  27 331 

259 35.  "9.  M5,  213 


LAWS   CHAP. 

184S,   265 36,  122,  2l8 

1849,  250 34 

1849,  308... 12,  13,  14,  55,  138,  210 

1850,  140 29,30,31,55,64,118, 

128,  144,  181, 200,  213 

1850,  172 245 

1851,  14 3 

1S51,  122 45 

1851,  321 194 

1852,  228.  .  .  .36,  110,151,215,216 

1853,  117 37,  119.  135.  151.  163. 

165, 17S, 179, 213,  214 

1853,  124 36 

1853,  135 37,  120,  146,  176 

1853,  333 101,  133,136,  172, 

206,  227 

1853,  463 12,  14,  16,  17,  iS,  55, 

113,  140,  210 
1853,  466 12,14,15,55,71,96, 

112,  113,  139, 181,  210 

1853,  471 36,  218 

1853,  502 S8 

1853,  528 12 

1554,  201 193,  332 

1854,  232. .  .  .3S,  no,  147,  162,  178, 

216,  217 
1854,  282 31,  200,  213 

1854,  369 139 

1855-   37  265 

1555.  30i 3 

1855,  390 219 

1S57,   29 S,  51 

1S57.  444 S3 

1857,  456 261 

1857,  469 55 

1857,  546-3S,  146,  162, 176,  214,215 

1S5S,  3M 304 

185S,  34S 311 

1S59,  366 12,14,  17-  139.  140 

xxiii 


XXIV 


SESSION   LAWS   CITED. 


LAWS  CHAP. 

i860,    269 97 

lS6l,     92 14 

1S61,  149 39-  147.  179.  2I7 

1561,  170 92,  331 

1861,  326 13 

1862,  300 17 

1562,  472 193,  332 

1563,  63 3 

1564,  337 4 

1864,  425 x33»  210 

1864,  517 62,91 

1564,  5S2 31 

1865,  234 4 

1565,  307 4 

1865,  328 , 17.  55 

1566,  73 125 

1866,  514 139.  U0 

1866,  577 i8r 

1S66,  73o 87 

1566,  838 55 

1866,  843 140 

1567,  12 51 

1867,  91 111,112 

1867,  574 13 

1867,  709 316 

1S67,  937 52 

1S67,  960 69 

1867,  974 39,65,122,218 

1868,  318 55 

1868,  779  64 

1S6S,  7S1 4 

1869,  706 . .  67 

1569,  902 313,  314 

1369,  917 74,  75 

1870,  135 44 

1570,  322 93,  94,  95 

1570,  568 76 

1871,  95 34.  259 

1571,  481 ,  62 

1571.  535 5 

1871,  608 55 

1872,  146 53,  56 

1572,  248.... 40,  120,  147,  1S0,  217 

1872,  374 34,  64 

1872,  609 40 

1872,  611 108 

1S72,  820 40 


872 

373 

873 

373 

373 

873 

873 

374 

S74 

S75 

375 

375 

875 

375 

375 

S75 

375 

375 

375 

375 

S55 

S75 

S75 

375 

375 

875 

875 

375 

375 

875 

375 

375 

S75 

375 

345 

375 

S75 

S75 

3.75 

875 

S75 

375 

875 

375 

S75 

S75 

375 


CHAP. 

S29 SO 

151 I89,  igO 

469 8l,  82,  83 

7IO 31,  200 

737 4i 

814 4i 

S51 14 

143 42,  151,  215 

430 84,  85 

88 67 

113 5 

120 no 

1S1 41 

20S 96>  "3 


256. 

319- 

365 

423- 

445- 


1 1,  45,  48,  333 

1,  §  1 8,  12,  79,333 

1,  §  2 12,  53,  333 

1,  §  3 10,  12,  102,  334 

1,  §  4 10,  46,  334 

1,  §  5 IO-  ir>  58,  334 

1,  §6 59.  335 

1,  §  7 IX,  59-  335 

1,  §  S 336 

t,  §  9 9-  336 

1,  §  10 11,  57,  93,  337 

1,  §  11 126,  33S 

1,  $  12 127,  338 

1,  §  13 63,  339 

1,  §  14 63,  101,  339 

1,  §  15 "9-  339 

1,  §  16 151,  193,  340 

1,  §  17 ^i,  340 

1,  ?  18 137,  165,  341 

1,  §  19 162,  342 

1,  §  20 163,  343 

I,  §  21 176,  343 

1,  §  22 179,  343 

1,  §  23 209,  343 

1,  §  24 343 

1,  §  25 209,  344 


SESSION    LAWS   CITED. 


XXV 


[875. 

[375, 
[875, 
1875, 
[875, 
[875, 
[S75, 
[875, 
[875, 
[875, 
1S75, 
[875, 
[875, 
[875, 
[875, 

[S76, 
[S76, 
[S76, 
[870, 
[876, 
[877, 
[877, 
1S77, 
'877, 
1877, 
[878, 
[878, 
iSyS, 
[878, 
[87S, 
[878, 
[878, 
tS79, 
[879, 
[879, 
[879, 

1879. 
[880, 
[SSo, 
[880, 
tSSo, 
t8So, 
[880, 
[880, 
[S80, 
[880, 


611,  §  26 199,  344 

611,  ?  27 199,  345 

611,  §  28 199,  345 

6ll,  §  29 51,  345 

6ll,  ^  30 34^ 

611,  §  31 92,  346 

611,  §  32 79,  346 

611,  §  33 77,  348 

611,  §34 77,  20S,  34S 

6il,  §  35 47-  348 

611,  §  36 349 

611,  §  37 137.  209,  350 

611,  §  38 35i 

611,  §  39 351 

613 24,  117,  129,  143, 

199,  212 

135 52 

280 93 

358 55 

415 4i 

446 84,  85 

15S 83 

183 9S 

211 46 

229 315 

311 249 

9S .  .  .71,  72 

163 62 

203. ..43,  56,  121,  148,  149.217 

264 48,  IO5,  IO6,  I07.  112 

316 

337 

394 

161 

253 

4S5 

505  

512 

94 

110 

113 


[3 


97 
M 
..  3S 
..  210 

••  52 
16,  17 


87 

34 

■  75 

315 

83 

155 86,  11S 

168 314 

1S2 64 

225 105 

245 306,  311 

267 42 


LAWS  CHAP. 

I88O,  427 113 

iSSO,  452 14 

iSSO,  5IO 200,  20I 

1580,  537 317 

1880,  542... 266,  267,  26S,  269,  270, 

273,  274,  275,  353 

1881,  22 45 

1SS1,   77 123 

1SS1,  213 41 

1SS1.  311 34 

1881,  313 35 

1851,  317 201 

1SS1,  313 35 

1SS1,  361... 267,  269,  270.  273,  274, 

275,  276,  277,  27S.-353 

1SS1,  433 259 

1881,  468 29,  31,  32, 

33,  55,  11S,  12S 

1SS1,  485  29 

1881,  560 17 

1551,  5S9 5 

1581,  650 5 

1881,  685 74 

1582,  73 34 

1552,  151 268,  270,  276,  361,  363 

1882,  156 6,  45 

1852,  218 14 

1852,  273 5,  55 

1SS2,  2go 54 

1882,  393 29 

1882,  402 153.  155 

1552,  409.  ....21,  22,  23,  60,  72,  73, 

74,  114,  115,  lid,  128; 
141,  142,  143,  150,  152, 

155.  156,  159,  l6°>  l6r> 

ig5,  ig6,  ig7,  igS,  211, 

255,  265,  266,  268,  279,  2S0 

1553,  46 31 

1883,  102  . 126,  i  - 

1SS3,  232 323 

1883,  238 37,  id 

1SS3,  240 5 

1853,  273 24,  117 

18S3,  33S 199 

1883,  361 53.  56 

1SS3,  37S.  ..256,  304,  306,  316,  317 
rS83,  497 34 


XXvi     SECTIONS   OF   CODE   OF   CIVIL   PROCEDURE   CITED. 


LAWS 
1884, 

1384, 
ISS4, 
I8S4, 
ISS4, 
ISS4, 
I8S4, 
I884, 
1885, 
ISS5, 
I8S5, 
1885, 
I885, 
1885, 


I8S5, 
1885, 


i8S5, 
1S86, 
1886, 
1886, 
1886, 
i886; 
i886; 
1SS6, 
1886, 
1886, 
1SS6, 
1887 

1887: 


CHAP. 

133 x7>  94 

208 137,  165,  342 

223 181 

2S5 305.  3o6 

367 69.  70,  71 

3S6 6 

397 I27 

434 153 

262 17 

327 IIX 

376 3i3 

422 41 

489 203,  205 

498 201 

501 268,  270,  276,  277, 

361,  363,  364,  365 

535 73,  79 

533 iS,  19,  20,  57,  59,  99, 

102,  114,  127,  128, 
140,  151,  193.  199 

540 79.  348 

140 120 

143 6,  46 

266 27S 

275 317 

310 302 

394 55 

575 "4 

6ll 20,  21,  114,  140 

659 260 

679 260,272,278,279 

284 6,  46 

32S 255 


LAWS  CHAP. 

1887,   450 53 

1SS7,  517 92.  93 

1SS7,  518 96 

1887,  546 24,25,26,27,28, 

116,  144,  180,  212 

1887,  650 9s 

1SS7,  724 64,  181 

1888,  313 3.  322 

1888,  394 63,  339 

1888,  .462  44 

1888,  513 352 

1888,  514 29 

1889,  12 280 

1889,   57 64 

1889,  r?7 52 

1889,  338 16 

1889,  353 26S,  272,  356 

1889,  3S1 231 

1889,  42'2 8 

1889,  426 118 

1SS9,  463 277,278,366 

1889,  558 212 

1890,  23...  10,  11,  57>  98.  334.  338 

1S90,  98 144 

1890,  119 385 

1890,  193 83,  3S6 

1890,  292 389 

1890,  38S 231 

1890,  400 39° 

1890,  439 39° 

1S90,  506 391 

1890,  508 397 


SECTIONS  OF  CODE  OF  CIVIL   PROCED- 
URE CITED. 


SECTION 

217 235 

263 236 

264 237 

267 237 

292 237 

315 237 

316 237 

333 237 


SECTION 

341 238 

393 246 

399 246 

43i 239 

432 240 

43S • 242 

439 243 

525 245 


SECTIONS   OF   CODE   OF   CIVIL   PROCEDURE   CITED.   XXVli 


SECTION 

610 254 

636 250 

646 250 

647 251 

64S 251 

649 • 251 

650 251 

707 258 

791 47 

839 250 

868 248 

869  248 

872 24S 

929 .••••• 249 

930  249 

931 • 250 

960 53 

1216 257 

1217 257 

I370 258 

1775 243 

1776 .  244 

1777 244 

1778 247 

1779 •  ••  232 

1780 233,  234 

1781 295 

1732 295 

1783 295 

1734 258,  291 

1785 288 

1786 289 

1787 253,  289,  291 

17S8 255,  290,  292 

1789 290 

1790 292 

1791 292 

1792  292 

1793 293 

1794 ; •  •  •  293 

1795 293 

I796 293 

1797 295 

1798 296 

1799 297 

1800 298 

1S01 298 

1802 253,  298 


SECTION 

I8O3 29S 

I805 299 

IS06 253,  299 

I8O7 30O 

1  80S 30O 

l8Q9 254,  301 

lSl° 255,  303 

1S11 301 

ISl2 301,  304 

1813 301 

1902 24<» 

J955 253 

1986 300 

2419 2S2 

2420 2S2 

2421 283 

2422 283 

2423 255,  285 

2424 285 

2425 286 

2426 286 

2427 286 

2428 2S7 

2429 2S7 

2430 2S7 

2441 25S 

2444 258 

2463 258 

2865 , '.  .  238 

2879 241,  253 

2880 242 

2S81 242 

2882 242 

3203 23S 

3204 23S 

3205 23S 

3215 23S 

3226 2  ;- 

3268 24! 

3343  234,  235 

3390 88 

3391 89 

3392 89 

3393 9° 

3394 9° 

3395 90 

3396 9° 

3397 90 


xxviil  SECTIONS   OF   PENAL   CODE   CITED. 


SECTIONS    OF    CODE   OF   CRIMINAL 
PROCEDURE   CITED. 


SECTION 
675... 


■     SECTION 
232      I         682 232 


SECTIONS   OF    PENAL    CODE   CITED. 


SECTION 

59o 1S1,  188 

.591 i82 

592 l83 

593 lS3 

594 J59.  184 

595 160,  184 

596 1S4 

597 l84 

59S lS5 

599 l85 

600 1S5 

601 185 


SECTION 

602 l86 

603 172,  l86 

604 186 

605 I86 

606 IS6 

6O9 l86 

6lO 187 

6ll IS7 

612 187,  254 

613 107 

614 IS7 


THE   LAW  OF  CORPORATIONS. 


CHAPTER   I. 

ORGANIZATION. 

Art.       I.  Manufacturing  Corporations. 

Art.     II.  Business  Corporations. 

Art.   III.  Insurance  and  Guarantee  Companies. 

Art.    IV.  Banking,  Safe  Deposit  and  Trust  Companies. 

Art.      V.  Railroad  and  Construction  Companies. 

Art.    VI.  Miscellaneous  Corporations. 

Art.  VII.  General  Provisions. 

The  Constitution  of  the  State  of  New  York  provides 
that  corporations  may  be  formed  under  general  laws,  but 
shall  not  be  created  by  special  act,  except  for  municipal 
purposes,  and  in  cases  where,  in  the  judgment  of  the  legis- 
lature, the  object  of  the  corporation  cannot  be  attained 
under  general  laws.1 

Under  this  provision  general  laws  for  the  organization 
of  corporations  for  different  purposes  have,  from  time  to 
time,  been  passed,  until,  in  1875,  previous  legislation  was  sup- 
plemented by  a  law  so  broad  in  its  scope3  that  corporations 
may  now  be  organized  under  the  general  laws  for  the  pur- 
poses of  carrying  on  any  lawful  business. 

A  corporation  for  any  given  purpose  may  often  be 
organized  under  one  of  several  different  acts.  Thus  a 
corporation  for  manufacturing  purposes  may  be  organized 
under  the  law  of  1848 3  or  under  the  Act  of  1875  above 
referred  to,  and  the  various  considerations  of  the  different 

1  Article  VIII.,  sec.  1.  8  Laws  of  184S,  chap.  40. 

3  Laws  of  1875,  chap.  611. 


2  THE   LAW   OF   CORPORATIONS. 

liability  of  stockholders,  publicity  of  corporate  transactions, 
restrictions  as  to  incorporators,  etc.,  will  guide  the  prac- 
titioner in  his  selection  of  the  law  (where  a  choice  is  afforded) 
under  which  he  will  organize. 

Prior  to  the  adoption  of  the  Constitution  of  1846,  several 
acts  for  the  organization  of  corporations  for  specific  manu- 
facturing purposes  were  passed,1  but  these  will  not  be  con- 
sidered here,  as,  even  if  still  in  force,  they  are  practically 
obsolete. 


Article  I. 
Manufacturing  Corporations. 

The  Act  of  1848,  "to  authorize  the  formation  of  corpo- 
rations for  manufacturing,  mining,  mechanical  or  chemical 
purposes,''2  from  the  time  it  was  passed  until  1875  remained 
the  most  general  law  for  the  formation  of  corporations  in 
the  state,  and  under  it  by  far  the  greater  number  of  corpo- 
rations have  been  organized.  It  still  continues,  on  account 
of  the  facility  it  offers  for  the  organization  of  companies,  the 
liberality  of  its  enactments,  and  the  certainty  of  its  pro- 
visions arising  from  forty  years  of  judicial  construction,  not 
only  one  of  the  most  important,  but  the  one  that  is,  perhaps, 
generally  preferred  for  the  organization  of  those  corporations 
whose  purposes  admit  them  to  its  provisions. 

Under  this  act,  a  corporation  may  be  organized  for  any 
one  of  the  following  purposes  : 

Manufacturing,  Mining,  etc. — Carrying  on  any  kind  of  manu- 
facturing, mining,  mechanical  or  chemical  business. 

Printing  and  Publishing. — The  business  of  printing,  publish- 
ing or  selling  books,  pamphlets  or  newspapers,  or  adver- 
tising the  same  or  other  articles. 

1  Laws  of  1811,  chap.  67  ;  Laws  of       of  1821,  chap.  14. 
i8i5,chaps.  47  and  202  ;  Laws  of  1816,  2  See  App.  A  {post),  where  the  act 

chap.58,  Laws.of  1817, chap. 223;  Laws       is  given  in  full. 


ORGANIZATION.  3 

Real  Estate  Business. — Purchasing,  taking,  holding  and  pos- 
sessing real  estate  and  buildings,  and  selling,  leasing  and  im- 
proving the  same. 

Dairy  Purposes. —  Making  butter,  cheese,  concentrated  or 
condensed  milk,  or  any  products  of  the  dairy. 

Church  Sheds  and  Laundry  Purposes. — Erecting  buildings  for 
church  sheds  or  laundry  purposes,  and  carrying  on  of  laundry 
business. 

Slaughtering  Animals. — Slaughtering  animals. 

Towing. — Towing  or  propelling  canal-boats,  vessels,  rafts, 
or  floats  on  the  canals  or  navigable  rivers  of  the  State  of 
New  York  by  animal  or  steam  power. 

Coal  and  Farm  Produce. — Buying,  storing,  selling,  or  ship- 
ping coal,  merchandise,  and  farm  produce,  their  operations 
not  to  be  confined  to  the  county  in  which  their  certificates 
shall  be  filed. 

Hot  Water  and  Steam. — Supplying  of  hot  water  or  hot  air 
or  steam  for  motive  power,  heating,  cooking,  or  other  useful 
applications  in  the  streets  and  public  and  private  buildings 
of  any  city,  village,  or  town  in  this  state. 

Cattle,  etc. — Buying,  breeding,  grazing,  pasturing,  dealing 
in  and  selling  cattle,  sheep,  hogs,  horses  and  other  live 
stock  in  the  United  States  of  America,  British  North 
America  and  elsewhere.1 

By  subsequent  legislation  its  provisions  have  been  ex- 
tended to  corporations  organized  for  the  following  purposes  : 

Raising  Vessels. — Constructing  and  using  machines  for  the 
raising  of  vessels  or  other  heavy  bodies.3 

Collecting  and  Storing  Ice. — Collecting,  storing  and  preserv- 
ing ice,  preparing  it  for  sale,  transporting  and  vending  the 
same.3 

Mineral  Water. — Bottling  and  selling  mineral  water  drawn 
from  any  natural  mineral  spring.4 

1  Laws  of   1848,  chap.  40,  §  I,  as  3  Laws  of  1855,  chap.  301. 
amended  by  Laws  of  18S8,  chap.  313.  4  Laws  of  1S63,  chap.  63. 

2  Laws  of  1851,  chap.  14. 


4  THE   LAW   OF   CORPORATIONS. 

Navigation  and  Salvage — Constructing,  owning,  and  using 
vessels  and  machines  to  be  employed  for  hire  in  towing  ves- 
sels, carrying  freight  and  passengers,  and  in  aiding,  protect- 
ing and  saving  vessels  and  their  cargoes,  wrecked  or  in  dis- 
tress, on  any  of  the  navigable  rivers  or  lakes  in  or  bordering 
upon  the  State  of  New  York,  or  on  the  high  seas,  or  in  the 
various  arms  of  the  seas  and  rivers  running  into  the  same, 
with  all  the  rights  appertaining  by  law  to  private  individuals 
performing  services  as  salvors.1 

Floating  Elevators,  etc. — For  the  purpose  of  carrying  on  the 
business  of  constructing,  maintaining  and  using  stationary 
and  floating  elevators  or  warehouses  for  all  purposes  per- 
taining to  or  connected  with  trade  or  commerce  in  the  sev- 
eral kinds  of  grain  in  the  State  of  New  York. 

Skating  Rinks. — Purchasing  a  suitable  lot  and  erecting 
thereon  a  building  to  be  used  as  a  skating  rink,  and  for 
holding  fairs,  meetings,  exhibitions,  and  all  other  lawful 
entertainments  and  amusements.2 

Agricultural  Purposes. — Propagating,  cultivating  and  devel- 
oping the  different  varieties  of  grape,  and  the  manufacture, 
of  wines  and  brandies  therefrom,  and  cultivating  sugar-cane, 
cotton,  rice,  tobacco,  indigo,  and  other  products  of  the 
earth,  preparing  the  same  for  market,  and  for  transporting 
and  disposing  of  the  same.3 

Coal  and  Peat. — Buying  and  selling  and  transporting  coal 
and  peat  of  all  kinds.4 

Residences,  etc. — Purchasing,  acquiring,  maintaining,  and 
improving  real  estate  for  residences,  homesteads  and  apart- 
ment houses,  to  be  leased  and  conducted  by  the  corporation 
so  formed,  and  occupied  by  the  stockholders  thereof  and 
others. 

Public  Hall.  —  Purchasing,  acquiring,  maintaining,  improv- 
ing and  managing  a  building  or  buildings  which  shall  con- 

1  Laws  of  1S64,  chap.  337.  3  Laws  of  1S65,  chap.  234. 

2  Laws  of  1864,  chap.  337,  §  3,  as  4  Laws  of  1S65,  chap.  307. 
amended  by  Laws  of  1S68,  chap.  781. 


ORGANIZATION.  $ 

tain  a  hall  for  public  meetings  and  entertainments,  and 
apportioning  and  distrib>.  ig  the  same  among  the  stock- 
holders and  members  of  such  corporation. 

Improving  Land,  etc. — Filling  in  and  improving  lands.' 

Transporting  Oil,  etc. — The  storage,  conveyance  and  trans- 
portation of  petroleum  and  other  oils.2 

Dredging  and  Dock  Building. — Constructing  and  using  ma- 
chines for  dredging  and  filling  of  land  and  dock-building,  or 
for  the  construction  and  operation  of  inland  wharves  and 
basins,  and  the  purchase,  improvement  and  sale  thereof.3 

Water  for  Mining,  etc. — Accumulating,  storing,  conducting, 
selling,  furnishing  and  supplying  water  for  mining,  domestic, 
manufacturing,  municipal  and  agricultural  purposes.4 

Warehouses  and  Elevators.  — Carrying  on  the  business  and 
operations  of  owning,  constructing,  maintaining,  using  and 
operating  warehouses,  elevators,  docks,  wharves  and  basins.5 

Railway  Depots. — Purchasing,  acquiring,  building  upon 
and  improving  real  estate  ijr  union  railway  depots,  to  be 
leased  and  occupied  by  any  railroad  company  or  companies 
owning,  leasing  or  operating  a  railroad  within  this  state.6 

News-Agencies. — Receiving,  obtaining,  collecting  and  ac- 
cumulating items  and  matters  of  news,  and  selling,  vending, 
furnishing  and  supplying  the  same.7 

Water  for  Power,  etc. — Boring,  sinking,  digging  for,  accu- 
mulating, conducting  by  underground  pipes,  conduits   and 

1  Laws    of     1871,    chap.     535,    as  may  avail  itself  of  the  benefit  of  the 

amended  by  Laws  of  1881,  chap.  589.  act  by  signing  and  acknowledging  a 

*  Laws  of  1875,  chap.  113.  certificate  stating  that    it    intends  to 

3  Laws  of  1875,  chap.  365.  avail  itself  of  such  act,  and  filing  such 

4  Laws  of  1880,  chap.  85.  Section  certificate  with  the  clerk  of  the  county 
3  provides  that  any  mining  com-  where  the  original  certificate  was 
pany  previously  incorporated  may  filed  and  a  certified  copy  in  the  office 
conduct  this  business,  provided  the  of  the  Secretary  of  State.  By  section 
intention  to  do  so  was  specified  5,  the  city  of  New  York  is  excepted 
among  the  objects  for  which  it  was  from  these  provisions. 

formed;    and,  under    section    4,     if  5  Laws  of  18S1,  chap.  650. 

such  intention  were  not  specified  in  6  Laws  of  1SS2,  chap.  273. 

the    certificate,    such    a    corporation  7  Laws  of  1SS3,  chap.  240. 


6  THE   LAW   OF   CORPORATIONS. 

reservoirs,  and  furnishing  water  to  be  used  for  power  and 
fire  purposes.1 

Method  of  Organization. — Any  of  the  foregoing  corporations 
may  be  formed  by  any  number  of  persons  not  less  than 
three.  They  must  make,  sign  and  acknowledge  before 
some  officer  competent  to  take  the  acknowledgment  of 
deeds,  two  certificates  in  writing,  in  which  shall  be  stated : 
i.  The  corporate  name. 
.  2.  The  objects  for  which  the  company  shall  be  formed. 

3.  The  amount  of  capital  stock. 

4.  The  time  of  its  existence,  not  exceeding  fifty  years. 

5.  The  number  of  shares  of  which  the  stock  shall  consist. 

6.  The  number  of  trustees,  and  their  names,  who  shall 
manage  the  concerns  of  the  company  for  the  first  year.2 

7.  The  place  or  places  where  the  company  shall  carry 
on  its  business. 

One  certificate  must  be  filed  and  recorded  in  the  office  of 
the  clerk  of  the  county  in  which  the  principal  place  of  busi- 
ness of  the  company  is  to  be  located,  and  the  duplicate  in 
the  office  of  the  secretary  of  state.3 

Before  a  certificate  can  be  filed  and  recorded,  the  fee  for 
filing  and  for  recording  must  be  paid4 ;  and  the  tax  for  or- 
ganization, of  one  eighth  of  one  per  cent,  upon  its  capital, 
must  be  paid  to  the  state  treasurer.5 

When  the  certificate  has  been  filed  and  recorded,  the 
persons  who  have  signed  and  acknowledged  the  same,  and 

1  Laws  of  18S4,  chap.  386.  be  reviewed  by  a  writ  of  mandamus. 

2  Corporators    are    the    associates       People  ex  rel.  Belknap  v.  Beach,   19 
engaged    in   organizing   a   company.        Hun,  259. 

When  the    organization   is  complete  4  Laws    of    18S2,    chap.    156,    §    1, 

their  functions  and  liabilities   cease,  provides  that  the  Secretary  of  State 

and  then  devolve  upon  the  directors,  may  charge  a  fee  of  ten  dollars  for 

trustees  or  stockholders,  as    may  be  filing,  and  fifteen  cents  per  folio  for 

provided  in  the  act  of  incorporation.  recording,  every  certificate  of  incor- 

Chase  v.  Lord,  77  N.  Y.  1.  poration    under    the    Manufacturing 

3  In  case  of  the  refusal  of  the  sec-  Act. 

retary  of   state,  for   any   reason,   to  5  Laws    of     1886,     chap.     143,    as 

file  the  certificate,  his  decision  may       amended  by  Laws  of  1S87,  chap.  284. 


ORGANIZATION.  / 

their  successors,  shall  be  a  body  politic  and  corporate,  in 
fact  and  in  name,  by  the  name  stated  in  the  certificate,  and 
by  that  name  shall  possess  all  the  general  powers  of  cor- 
porations.1 

(1)  The  Corporate  Name. — This  act  contains  no  restriction 
as  to  the  name  which  may  be  adopted,  and,  provided  that 
it  is  not  the  same  as  that  of  any  existing  corporation  in  the 
state,  or  so  nearly  resembling  it  as  to  be  likely  to  deceive, 
any  name  may  be  chosen. 

The  corporation  may  be  called  a  company,  a  corporation, 
an  association,  or  by  the  name  of  a  firm,  or  even  by  the  name 
of  a  street  and  number. 

(2)  The  Objects  for  which  it  is  Formed. — To  set  forth  prop- 
erly the  objects  for  which  the  company  is  formed  is  of 
paramount  importance,  as  the  certificate  constitutes  the 
charter  of  the  company,  and  its  charter  is  the  measure  of  its 
powers.  What  that  includes  impliedly  excludes  all  others. 
It  is  usually  preferable,  therefore,  to  set  forth  its  objects  in 
as  general  terms  as  possible  and  bring  it  within  the  act ;  *  and 
if  it  is  desirable  to  specify  more  particularly  the  definite 
objects  for  which  it  is  organized,  to  follow  the  general  state- 
ment by  words  designating  such  particular  object. 

It  will  ordinarily  be  found  that  the  exact  words  of  the 
statute  confer  the  broadest  powers. 

On  the  other  hand,  it  is  sometimes  desirable  strictly  to 
limit  the  corporate  powers,  and  then,  of  course,  the  objects 
will  be  specifically  designated. 

(3)  The  Amount  of  Capital  Stock. — This  may  be  of  any  desired 
amount.  It  is  subject,  however,  to  a  tax  or  license  fee  of 
one  eighth  of  one  per  cent. 

(4)  The  Time  of  Existence. — This  may  be  for  any  time  not 
exceeding  fifty  years. 

1  Laws  of  1S4S,  chap.  40,  §  2.  turing  only,  or  mining  only  ;   but  a 

2  The  objects  must  be  confined  to  company  organized  for  mining  need 
one  of  the  general  purposes  men-  not  confine  its  business  to  one  metal, 
tioned  in  the  section  ;  thus  manufac-  People  v.  Beach,  19  Hun,  259. 


8  THE   LAW   OF   CORPORATIONS. 

(5)  The  Number  of  Shares. — There  is  no  restriction  as  to  the 
number  and  par  value  of  the  shares. 

(6)  The  Number  of  Trustees,  etc. — There  may  not  be  less 
than  three  nor  more  than  thirteen  trustees.  A  majority  of 
them  must  be  citizens  and  residents  of  this  state. 

The  trustees  named  in  the  certificate  manage  the  con- 
cerns of  the  company  for  the  first  year,  or  until  their  suc- 
cessors are  chosen. 

(7)  The  Place  or  Places  where  the  Company  shall  carry  on  its 
Business. — If  the  company  is  formed  for  the  purpose  of  carry- 
ing on  any  portion  of  its  business  in  any  place  out  of  the 
state,  the  certificate  must  so  state,  and  must  also  state  the 
name  of  the  town  and  county  in  which  the  principal  part  of 
its  business  within  the  state  is  to  be  transacted ;  and  such 
town  and  county  will  be  deemed  the  principal  place  of  busi- 
ness of  the  company.1  If  the  place  or  places  of  business 
outside  of  the  state  are  set  forth  with  reasonable  certainty 
it  is  sufficient,  even  if  the  town  or  county  be  not  designated.3 

Article  II. 

Business  Corporations. 

Under  the  act  providing  for  the  organization  of  business 
corporations,  passed  in  1875,  a  corporation  maybe  organized 
for  carrying  on  any  lawful  business  except  banking,  insur- 
ance, the  construction  and  operation  of  railroads  or  aiding 
in  the  construction  thereof,  and  the  business  of  savings  banks, 
trust  companies  or  corporations  intended  to  derive  profit 
from  the  loan  or  use  of  money,  or  safe-deposit  companies, 
including  the  renting  of  safes  in  burglar-  and  fire-proof 
vaults.3 

1  Laws  of  1857,  chap.  29,  §  3.  organized  under  this  act  for  the  pur- 

''  People  ex  rel.  Belknap  v.  Beach,  pose  of  boring,  drilling,  digging    or 

19  Hun,  259.  mining  tor  natural  gas,  and  convey- 

3  Laws  of  1875,  chap.  611,  §  1.      By  ing   the  same   in  pipes,  etc.,  are  au- 

Laws  of  1889,  chap.  422,  companies  thonzed   to   lay  pipes   in   the  public 


ORGANIZATION.  9 

The  scope  of  this  act  is  best  shown  by  noting  the  objects 
for  which  corporations  have  been  formed  under  it.1  Thus, 
not  only  have  corporations  been  organized  under  this  act 
for  manufacturing  and  for  mining  purposes,  for  buying,  sell- 
ing and  dealing  in  various  kinds  of  personal  property  and 
real  estate,  but  also  for  such  purposes  as  the  following: 
Maintaining  a  ferry ;  transacting  a  general  mercantile  and 
importing  business;  improving  land,  building  hotels  and 
boarding  houses  ;  publishing  books,  pamphlets  and  news- 
papers ;  purchasing  bills  of  exchange,  promissory  notes  and 
other  evidence  of  indebtedness  of  nations  and  corporations, 
and  selling  the  same  ;  cultivating  a  taste  for  art  and  build- 
ing and  renting  opera  houses ;  transmitting  messages  and 
furnishing  service,  etc. ;  transportation  of  commercial  com- 
modities ;  buying  and  selling  stocks,  bonds,  mortgages,  etc. ; 
general  shipping  and  forwarding  and  transportation  bus- 
iness; establishing  telephone  lines  in  foreign  countries; 
soliciting  business,  making  collections  and  guaranteeing 
payments  to  corporations  ;  running  cabs  and  hacks  drawn 
by  horses  for  the  conveyance  of  passengers ;  gathering  and 
distributing  news  to  newspapers  ;  constructing  a  canal  (in  a 
foreign  country)  ;  erecting  and  maintaining  a  light-house  (in 
a  foreign  country)  ,  mercantile  agency  ;  protecting  merchants 
from  bad  debts ;  running  stages  and  omnibuses ;  running  a 
line  of  steamboats ;  searching  and  guaranteeing  titles  to 
real  estate  ;  detective  business  ;  agency  business  ;  brokerage  ; 
guaranteeing  collection  of  claims ;  guaranteeing  endow- 
ments. 

The  method  of  organization  is  quite  unlike  that  of  the 
organization  of  manufacturing  corporations  as  shown  in  the 
last  article.     There  must  be  three  or   more  corporators,  a 

roads  and  highways,  and  to  enter  10  the  session  laws  of  each  year,  a 
upon  and  acquire  land,  with  or  with-  statement  of  the  corporations  organ- 
out  the  owners'  consent,  for  the  pur-  ized  under  it.  stating  their  name, 
pose  of  conveying  natural  gas.  principal    business,    etc      Laws    of 

1  The  secretary  of  state  is  required  1S75,  chap.  611,  i$  9- 
by  the  act  to  publish,  as  an  appendix 


IO  THE   LAW    OF   CORPORATIONS. 

majority  of  whom  must  be  citizens  and  residents  of  this 
state.  They  must  make,  sign  and  acknowledge  a  certificate 
which  shall  set  forth  : 

i.  The  name  of  the  proposed  corporation. 

2.  The  object  for  which  it  is  formed,  including  the  nature 
and  locality  of  its  business. 

3.  The  amount  and  description  of  the  capital  stock. 

4.  The  number  of  shares  of  which  such  capital  stock 
shall  consist. 

5.  The  location  of  the  principal  business  office. 

6.  The  duration  of  the  corporation,  which,  however,  can- 
not exceed  fifty  years.1 

The  certificate,  it  will  be  noticed,  is  similar  to  that  used 
under  the  Manufacturing  Act;  and  where  the  two  correspond, 
what  was  said  in  the  last  article  will  apply  to  this.  No 
directors  or  trustees,  however,  are  named  in  this  certificate ; 
for  whereas,  under  the  Manufacturing  Act,  the  filing  and 
recording  one  certificate  with  the  county  clerk,  and  the 
duplicate  with  the  secretary  of  state,  completed  the  incor- 
poration of  the  company,  here  filing  the  certificate  with  the 
secretary  of  state  is  only  preliminary  to  the  organization. 

The  certificate  must  be  filed  with  the  secretary  of  state, 
who  will  thereupon  issue  a  license  to  the  persons  making 
such  certificate,  empowering  them  as  commissioners  to 
open  books  for  subscriptions  to  the  capital  stock.2  No  sub- 
scription may  be  received  unless,  at  the  time  of  making  it, 
the  subscriber  pays  ten  per  cent,  of  the  par  value  of  the 
stock  subscribed  for  in  cash.3  The  delivery  of  a  check 
only  is  not  a  compliance  with  the  statute,  and  creates  no 
contract  of  subscription  that  can  be  enforced  either  by  the 
commissioners  or  by  the  subscriber.4  If,  however,  a  check 
is  delivered,  and  as  a  matter  of  fact  is  paid,  it  would  prob- 
ably satisfy  the  requirements  of  the  statute  and  the  contract 

1  Laws  of  1S75,  chap.  611,  §  3,  as  s  Id.  §  5. 

amended  by  Laws  of  iS90,chap.23,§  1.  4  Excelsior    Grain   Binder    Co.     v. 

2  Id.  §  4.  Stayner,  25  Hun,  91. 


ORGANIZATION.  1 1 

would  be  complete,  even  did  a  short  time  elapse  between 
the  delivery  and  payment.1 

When  one  half  of  the  capital  stock  has  been  subscribed, 
a  meeting  of  the  subscribers  must  be  called  by  the  commis- 
sioners for  the  purpose  of  adopting  by-laws  and  electing 
directors.  At  least  five  days  before  the  meeting,  a  written 
or  printed  notice  stating  the  time,  place  and  object  of  such 
meeting  must  be  deposited  in  the  post-office,  addressed  to 
each  subscriber  at  his  last  known  place  of  residence.1' 

At  the  time  and  place  designated  in  the  notice,  the  meet- 
ing should  be  called  to  order  by  one  of  the  commissioners, 
the  license  for  obtaining  subscriptions  and  the  notice  of  the 
meeting  read,  and  a  chairman  and  secretary  elected.  A 
resolution  for  the  adoption  of  by-laws  should  be  offered  and 
by-laws  adopted.  A  board  of  directors,  consisting  of  not  less 
than  three  nor  more  than  thirteen,  should  then  be  elected. 
Each  director,  at  the  time  of  his  election  and  throughout 
his  term,  must  be  a  stockholder  in  the  company  to  the  ex- 
tent of  at  least  five  shares.3     No  other  restriction  is  imposed. 

A  complete  record  of  the  proceedings  of  the  meeting 
with  a  copy  of  the  subscription  list,  a  copy  of  the  by-laws 
adopted,  and  the  names  of  the  directors  chosen,  must  then 
be  made  and  verified  and  filed  in  the  office  of  the  secretary 
of  state,  who  will  thereupon  issue  to  the  directors  a  cer- 
tificate setting  forth  that  said  corporation  is  fully  organized 
in  accordance  with  the  act.  The  certificate  must  include  a 
copy  of  the  original  certificate,  the  date  and  place  of  sub- 
scribers meeting,  the  names  of  the  directors  elected,  and  a 
statement  that  all  the  provisions  of  this  act  have  been  duly 
observed  in  the  organization  of  such  corporation.  Within 
ten  days  after  the  issuing  of  the  certificate,  a  copy  must  be 
filed  and  recorded  in  the  office  of  the  clerk  of  the  county  in 
which  the  principal  business  office  of  the  company  is  situated.'1 

1  Black   River,    etc.,    R.  R.   Co.  v.  2  Laws  of  1S75,  chap.  611,  §  5. 

Clarke,    25    N.    Y.    208;     Beach     v.  3  Id.  §  10,  as  amended  by  Laws  of 

Smith,   30  id.  116;  N.   Y.  6°  0.  M.  1890,  chap.  23,  §  2. 

R.  R.  Co.  v.  Van  Horn,  57  id.  473.  4  Id.  §  7. 


12  THE   LAW   OF   CORPORATIONS. 

Previous  to  filing  the  record  with  the  secretary  of  state  and 
the  issue  of  the  certificate  by  him,  his  fees  and  the  organiza- 
tion tax  of  one  eighth  of  one  per  cent,  on  the  capital  must 
be  paid. 

When  thus  organized,  the  corporation  possesses  the  gen- 
eral powers  of  corporations  organized  under  the  laws  of  this 
state.1 

Article  III. 
Insurance  and  Guarantee  Companies. 

Subdivision  1.  Marine  Insurance  Companies.  Any  number  of 
persons,  not  less  than  thirteen,  may  organize  a  company  for 
the  purpose  of  making  insurance  upon  vessels,  freights, 
goods,  wares,  merchandise,  specie,  bullion,  jewels,  profits, 
commissions,  bank-notes,  bills  of  exchange  and  other  evi- 
dences of  debt,  bottomry,  and  respondential  interests,  and  to 
make  all  and  every  insurance  appertaining  to  or  connected 
with  marine  risks  and  risks  of  transportation  and  navigation.* 

They  must  file,  in  the  office  of  the  Superintendent  of  the 
Insurance  Department,  a  declaration  signed  by  all  the  cor- 
porators,  expressing  their  intention  to  form  such  a  company. 
A  copy  of  the  charter  proposed  to  be  adopted  must  be  com- 
prised in  the  declaration.  They  must  also  publish  a  notice 
of  such  intention  once  a  week,  for  at  least  six  weeks,  in  a 
public  newspaper  in  the  county  in  which  the  company  is 
proposed  to  be  located.3 

The  charter,  which,  before  the  company  commences 
business,  must  be  approved  by  the  attorney-general,4  should 
set  forth  : 

i.  The  name  of  the  company. 

'  Laws  of  1875,  chap.  611,  §  2.  3  Id.  §  3,  as  modified  by  Laws  of 

2  Laws  of  1849.  chap.   308,  §  I,  as  1853,  chap.  463,  §22;  chap.  466,  §28; 

modified  by  Laws  of  1853.  chap.  463,  chap.  528,  §  I ;  and  by  Laws  of  1859, 

§  22;  chap.  466,  §  28  ;  and  by  chap.  chap.  366. 

528,  §  1.  4  Id-  §  «• 


ORGANIZATION.  1 3 

2.  The  place  where  the  principal  office  for  the  transac- 
tion of  its  business  shall  be  located. 

3.  The  nature  of  the  business  to  be  undertaken. 

4.  The  mode  and  manner  in  which  its  corporate  powers 
are  to  be  exercised. 

5.  The  mode  and  mannerof  electing  trustees  or  directors 
(a  majority  of  whom  shall  be  citizens  of  this  state),  and  of 
filling  vacancies. 

6.  The  period  for  the  commencement  and  termination 
of  its  fiscal  year.1 

7.  The  amount  of  capital  to  be  employed  in  the  transac- 
tion of  its  business.3 

After  having  published  the  notice  and  filed  the  declara- 
tion and  charter,  the  corporators  may  open  the  subscrip- 
tion books  to  the  capital  stock  of  the  company ; 3  provided, 
however,  that  no  company  shall  be  organized  with  a  smaller 
capital  than  two  hundred  thousand  dollars,  to  be  paid  in  in 
cash." 

All  charters  formed  or  extended  under  this  act  are  of 
thirty  years'  duration,  subject,  however,  to  amendment  or 
change  by  the  legislature.5 

After  the  charter  has  been  certified  by  the  attorney- 
general  to  the  Superintendent  of  the  Insurance  Department 
as  in  accordance  with  the  requirements  of  the  act  and  not 
inconsistent  with  the  constitution  or  laws  of  the  state,  the 
Superintendent  of  the  Insurance  Department  will  cause  an 
examination  to  be  made  to  ascertain  if  an  amount  equal,  at 
least,  to  the  minimum  capital  required  by  the  act  has  been 
paid  in,  and  a  certificate  to  that  effect  will  be  filed  in  his 
office,  and  he  will  thereupon  furnish  the  corporation  a 
certified   copy  of    the   charter  and   certificate,  which,  upon 

1  This  is  now  generally  made  De-  '  Laws  of  1849,  chap.  308,  §  10,  as 

cember  31st  to  conform  with  the  re-  amended  by  Laws  of  1867,  chap.  574. 

quirements  of  the  Insurance  Depart-  3  Id.  i;  4. 

ment    in    regard    to    annual  reports.  4  Laws  of  1878,  chap.  337. 

See  Laws  of  1861,  chap.  326,  ^  2.  5  Laws  of  1849   chap.   30S,  §  15. 


14  THE   LAW   OF   CORPORATIONS. 

being  filed  in  the  office  of  the  clerk  of  the  county  in  which 
the  company  is  to  be  located,  will  be  the  authority  to  com- 
mence business  and  issue  policies.1 

Subdivision  2.  Fire  and  Inland  Navigation  and  Transportation 
Insurance  Companies. — Any  number  of  persons,  not  less  than 
thirteen,  may  organize  a  company  for  the  purpose  of  mak- 
ing insurance  on  dwelling-houses,  stores  and  all  kinds  of 
buildings,  and  upon  household  furniture  and  other  property, 
against  loss  or  damage  by  fire,  and  the  risks  of  inland  navi- 
gation and  transportation.3 

A  declaration  similar  to  that  of  marine-insurance  com- 
panies3 must  be  filed  in  the  office  of  the  Superintendent  of 
the  Insurance  Department,  and  a  notice  of  intention  pub- 
lished for  at  least  two  weeks  in  a  public  newspaper  in  the 
county  in  which  such  insurance  company  is  proposed  to 
be  located.4 

No  company  may  be  incorporated  for  the  above  purposes 
with  a  smaller  capital  than  two  hundred  thousand  dollars,  to 
be  paid  in  in  cash.6 

A  majority  of  the  directors  or  trustees  must  be  citizens 
of  the  state,  and  each  must  be  the  owner,  in  his  own  right, 
of  at  least  five  hundred  dollars'  worth  of  the  stock  of  such 
company  at  its  par  value.6  With  these  exceptions,  what 
has  been  said  of  the  charter,  etc.,  of  marine-insurance  com- 
panies will  apply  here. 

After  the   examination    and  approval  of  the  charter  by 

1  Laws  of  1849,  chap.  308,  §  11,  as  tion  and  transportion  (Laws  of  1861, 

modified  by  Laws  of  1853,  chap.  463,  chap.  92).    Fire-insurance  companies 

§  22,  and  by  Laws  of  1859,  chap.  366.  may   insure  against  loss  or  damage 

3  Laws    of    1853,   chap.   466,  §    1.  by    lightning   (Laws    of    1880.  chap. 

Any  company  organized  under  this  452)  and  by  wind-storms  and  torna- 

act  for  the  purpose  of  insuring  against  does  (Laws  of  1882,  chap.  218). 

loss  or  damage  by  the  risks  of  inland  3  Ante,  p.  12. 

navigation     or    transportation    may  4  Laws   of  1853,  chap.  466,  §  3,  as 

make  insurance  upon  vessels,  boats,  modified  by  Laws  of  1859,  chap.  366, 

cargoes,  goods,  merchandise,  freights  and  amended  by  Laws  of  1873,  chap, 

and  other  property  against  loss  and  851,  §  1. 

damage  by  all  or  any  of  the  risks  of  6  Laws  of  1S78,  chap.  337. 

lake,  river,  canal  and  inland  naviga-  6  Laws  of  1853,  chap.  466,  §  4. 


ORGANIZATION.  1 5 

the  attorney-general,  and  its  certification  by  him  to  the 
Superintendent  of  the  Insurance  Department,  and  the  ex- 
amination by  him  or  his  agents,  at  which  examination  the 
corporators  or  officers  of  such  company  shall  be  required  to 
certify  under  oath  that  the  capital  exhibited  is  the  bona  fide 
property  of  the  company,  the  certificates  shall  be  filed  in 
the  office  of  the  Superintendent  of  the  Insurance  Depart- 
ment, and  he  will  deliver  to  such  company  a  certified  copy 
of  the  charter  and  of  such  certificates,  which,  on  being  filed 
in  the  office  of  the  clerk  of  the  county  where  the  company 
is  to  be  located,  shall  be  their  authority  to  commence  busi- 
ness and  issue  policies.1 

Subdivision  3.  Life,  Health  and  Casualty  Insurance,  Guarantee 
and  indemnity  Companies. — Any  number  of  persons,  not  less 
than  thirteen,  may  associate  and  form  a  company  or  incor- 
poration for  any  of  the  purposes  specified  in  either  of  the 
following  departments : 

First  Department.  To  make  insurance  upon  the  lives  of 
persons,  and  every  insurance  appertaining  thereto  or  con- 
nected therewith,  and  to  grant,  purchase  or  dispose  of  an- 
nuities and  against  disablement  or  death  resulting  from 
travelling  or  general  accidents. 

Second Departncmt.  To  make  any  of  the  following  kinds 
of  insurance,  and  to  make  such  examinations  and  inspections 
as  are  hereinafter  provided  :  first,  upon  the  health  of  per- 
sons ;  second,  against  injury,  disablement  or  death  of  persons 
resulting  from  travelling,  or  general  accidents  by  land  or 
water*  third,  guaranteeing  the  fidelity  of  persons  holding 
places  of  public  or  private  trust  ;  fourth,  upon  the  lives  of 
horses,  cattle  and  other  live-stock ;  fifth,  upon  plate  glass 
against  breakage  ;  sixth,  upon  steam-boilers  and  upon  pipes, 
engines  and  machinery  connected  therewith  or  operated 
thereby  against  explosion  and  accident,  and  against  loss  or 
damage  to  life  or  property  resulting  therefrom,  and  to  make 
inspections  of,  and  issue  certificates  of  inspection  upon,  such 

1  Laws  of  1853,  chap.  466,  §  10. 


l6  THE    LAW   OF   CORPORATIONS. 

boilers,  pipes,  engines  and  machinery ;  seventh,  against  loss 
by  burglary  or  theft,  or  both.1 

No  company  organized  under  this  act  for  the  purposes 
named  in  the  first  department  is  permitted  to  undertake 
either  of  the  risks  mentioned  in  the  second  department ;  and 
no  company  organized  under  this  act  for  either  of  the  pur- 
poses mentioned  in  the  second  department  may  undertake 
any  business  mentioned  in  the  first  department,  nor  can  any 
such  company  organized  since  the  passage  of  the  act  under- 
take or  do  more  than  one  of  the  several  kinds  of  insurance 
mentioned  in  the  second  department ;  and  no  company 
organized  under  this  act  may  undertake  any  business  or  risk 
except  as  therein  provided.  It  is  provided,  however,  that 
nothing  contained  in  this  act  shall  affect  the  business  of  any 
company  previously  organized  under  the  second  depart- 
ment.2 

A  declaration  signed  by  each  of  the  corporators,  setting 
forth  their  intentions  to  form  a  company  for  any  one  of  the 
above  purposes,  and  the  department  under  which  the  com- 
pany is  intended  to  be  formed,  must  be  filed  in  the  office  of 
the  Superintendent  of  the  Insurance  Department.  The 
declaration  must  comprise  a  copy  of  the  charter  they  pro- 
pose to  adopt,  which  shall  set  forth  : 

i.  The  name  of  the  company. 

2.  The  place  where  it  is  to  be  located. 

3.  The  kind  of  business  to  be  undertaken  and  the  de- 
partment (as  shown  above)  by  which  such  business  is  author- 
ized. 

4.  The  mode  and  manner  in  which  the  corporate  powers 
of  the  company  are  to  be  exercised. 

5.  The  manner  of  electing  trustees  or  directors  and 
officers  (a  majority  of  whom  must  be  citizens  of  the  state), 
the  time  of  such  election,  and  the  manner  of  filling 
vacancies. 

1  Laws  of   1853,  chap.  463,  §  1,  as  2  Id.   §    2,  as    amended   by    Laws 

amended  by  Laws  of  1889,  chap.  333.       of  1879,  chap.  485,  §  2. 


ORGANIZATION'. 


17 


6.  The  amount  of  capital  to  be  employed. 

7.  Such  other  particulars  as  may  be  necessary  to  explain 
and  make  manifest  the  objects  and  purposes  of  the  com- 
pany and  the  manner  in  which  it  is  to  be  conducted.1 

After  the  approval  of  the  declaration  and  charter  by  the 
attorney-general,  who  will  certify  the  same  and  deliver  it 
back  to  the  Superintendent  of  the  Insurance  Department, 
a  certified  copy  will  be  furnished  to  the  corporators,2  who 
shall  then  publish  their  intention  to  form  such  a  company, 
for  six  weeks  in  a  paper  in  the  county  in  which  the  principal 
office  of  the  company  is  to  be  located,  and  in  such  paper  in 
the  city  of  Albany  as  is  designated  to  publish  the  notices 
and  advertisements  required  by  the  Superintendent  of  the 
Insurance  Department. 

When  such  publication  shall  be  completed  the  corpora- 
tors are  authorized  to  open  books  to  receive  subscriptions 
to  the  capital  stock.3 

No  such  company  can  be  organized  with  a  capital  of  less 
than  one  hundred  thousand  dollars,  and  no  company  can 
commence  business  until  it  has  deposited  with  the  Superin- 
tendent of  the  Insurance  Department  the  sum  of  one  hun- 
dred thousand  dollars  in  such  securities  as  are  required  by 
the  act.4 

Upon  depositing  the  requisite  amount  of  capital,  the 
Superintendent  of  the  Insurance  Department  will  furnish 
the  corporation  with  a  certificate  of  such  deposit,  which,  with 
the  certified  copy  of  the  declaration  and  charter,  when  filed 
in  the  county  clerk's  office  of  the  county  where  such  com- 
pany is  to  be  located,  will  be  the  authority  to  commence 
business  and  issue  policies.5 

1  Laws  of  1853,  chap.  463,  §  3,  as      1885,  chap.  262. 

amended    by    Laws   of   1879,    chap.  4  Id.  §  6,  as  amended  by  Laws  of 

485,  §  3.  1862,  chap.  300,  §  2,  as  modified  by 

2  Id.   §  4,  as  modified  by  Laws  of  Laws  of  1865,  chap.  328,  §  2  ;  and  as 
1859,  chap.  366.  amended    by    Laws    of    1S81,    chap. 

3  Id.  §  5,  as  modified  by  Laws   of  560,  £  1. 
1884,   chap.    133,    and   by    Laws   of  s  Id.  §  7. 


l8  THE   LAW   OF   CORPORATIONS. 

Every  charter  of  a  company  organized  for  any  of  the 
above  purposes  continues  until  repealed.' 

Subdivision  4.  Title  Guarantee  Companies. — A  corporation 
may  be  organized  for  the  purpose  of  examining  titles  to 
real  estate,  of  procuring  and  furnishing  information  in  rela- 
tion thereto,  and  of  guaranteeing  or  insuring  bonds  and 
mortgages,  and  the  owners  of  real-estate  and  others  inter- 
ested therein  against  loss  by  reason  of  defective  titles  and 
other  incumbrances  of  or  upon  such  real  estate.2 

The  corporators,  who  must  be  at  least  five  in  number  and 
a  majority  of  whom  must  be  citizens  of  the  United  States 
and  residents  of  the  county  in  which  the  company  is  pro- 
posed to  be  located,  must  make  a  certificate,  signed  and 
sealed  and  duly  acknowledged  by  each  of  the  corporators, 
which  shall  set  forth  : 

i.  The  name  of  the  proposed  corporation. 

2.  Their  intention  of  forming  a  corporation  for  the  pur- 
pose of  examining  titles  of  real  estate  and  guaranteeing  and 
insuring  the  same,  and  bonds  and  mortgages,  as  expressed 
above. 

3.  The  amount  and  description  of  the  capital  stock. 

4.  The  location  of  the  principal  business  office. 

5.  The  duration  of  the  corporation,  which  however  shall 
not  exceed  fifty  years.3 

The  certificate  must  be  filed  in  the  office  of  the  Superin- 
tendent of  the  Insurance  Department,  and  he  will  thereupon 
issue  a  license  to  the  persons  making  such  certificate,  em- 
powering them  as  commissioners  to  open  books  of  subscrip- 
tion to  the  capital  stock  of  such  corporation,  at  such  times 
and  places  as  they  may  determine." 

The  commissioners  may  then  proceed  to  open  books  for 
subscription  to  the  capital  stock  of  such  corporation  ;  but  no 
subscription   shall  be  received  unless,  at  the  time  of  making 

1  Laws  of  1853,  chap.  463,  §  20.  3  Id.  §  3. 

2  Laws  of  1885,  chap.  538,  §1.  4  Id.  §  4- 


ORGANIZATION. 


19 


it,  the  subscriber  pays  ten  per  cent,  of  the  par  value  of  the 
stock  subscribed  for,  in  cash. 

When  one  third  of  the  capital  stock  has  been  subscribed, 
the  commissioners  must  call  a  meeting  of  the  subscribers,  by 
a  notice  in  writing  mailed  to  each  at  his  last  known  place  of 
residence,  at  least  five  days  before  the  time  fixed  for  such 
meeting,  designating  therein  the  place  and  object  of  the 
meeting,  for  the  purpose  of  adopting  by-laws  and  electing 
trustees  and  directors.1 

The  directors  may  not  be  less  than  five  nor  more  than 
thirteen  in  number,  and  each  director  at  his  election  and 
throughout  his  term  of  office  must  be  a  stockholder  in  the 
company  to  the  extent  of  at  least  five  shares.2 

Within  ten  days  after  such  subscribers'  meeting,  the  com- 
missioners must  file  in  the  office  of  the  Superintendent  of  the 
Insurance  Department  a  verified  record  of  the  proceedings, 
containing  a  copy  of  the  subscription  list,  a  copy  of  the  by- 
laws adopted,  and  the  names  of  the  directors  chosen,  and 
thereupon  the  Superintendent  will  issue  to  the  directors  a 
certificate  setting  forth  that  such  corporation  is  fully  or- 
ganized in  accordance  with  the  act. 

The  certificate  will  include  a  copy  of  the  original  certifi- 
cate, filled  by  the  corporators  in  the  office  of  the  Superinten- 
dent of  the  Insurance  Department,  the  date  and  place  of  the 
subscribers'  meeting,  the  names  of  the  directors  elected,  and 
a  statement  that  all  the  provisions  of  this  act  have  been 
fully  observed  in  the  organization  of  such  corporation. 

Within  ten  days  after  the  issuing  of  this  certificate,  a 
copy  must  be  filed  in  the  office  of  the  clerk  of  the  county 
in  which  the  principal  business  office  of  such  corporation 
is  situated,  and  upon  such  filing  the  incorporation  is  com- 
plete.3 

No  such  corporation  may  be  organized  with  a  smaller 
capital  than  one  hundred  and  fifty  thousand  dollars,  nor  with 

1  Laws  of  1885,  chap.  538,  §  5.  *  Id.  §  7. 

2  Id.  §9. 


20  THE   LAW   OF   CORPORATIONS. 

a  capital  exceeding  one  million  dollars;  and  the  capital  must 
be  divided  into  shares  of  one  hundred  dollars  each.1 

Subdivision  5.  Credit,  Guarantee  and  Indemnity  Companies. — 
Any  number  of  persons  not  less  than  eleven  may  associate 
and  form  an  incorporated  company  for  the  following  pur- 
poses: To  guarantee  and  indemnify  merchants,  manufac- 
turers, traders,  and  those  engaged  in  business  and  giving 
credit,  from  loss  and  damage  by  reason  of  giving  and  ex- 
tending credit  to  their  customers  and  those  dealing  with 
them.2 

They  must  file  in  the  office  of  the  Superintendent  of  the 
Insurance  Department  a  declaration  signed  by  each  of  them, 
expressing  their  intention  of  forming  a  company  for  the  pur- 
pose of  transacting  the  business  of  guaranteeing  and  indem- 
nifying persons  giving  credit  to  those  doing  business  with 
them  from  loss  by  reason  thereof,  as  expressed  above.  The 
declaration  must  also  comprise  a  copy  of  the  charter  pro- 
posed to  be  adopted.3 

The  charter  should  set  forth : 

i.  The  name  of  the  company. 

2.  The  place  where  the  principal  office  for  the  transac- 
tion of  its  business  shall  be  located. 

3.  The  nature  of  the  business  to  be  transacted,  as  set 
forth  above. 

4.  The  mode  and  manner  in  which  the  corporate  powers 
granted  are  to  be  exercised. 

5.  The  mode  and  manner  of  electing  directors  and  filling 
vacancies. 

6.  The  periods  of  commencement  and  termination  of  its 
fiscal  year. 

7.  The  amount  of  capital  employed  in  the  transaction  of 
its  business. 

Each  director  must  be  an  owner  in  his  own  right  of  at 

1  Laws  of  1885,  chap.  538,  §  10.  %  Id.  §  2. 

2  Laws  of  1886;  chap.  611,  §  1. 


ORGANIZATION.  21 

least  one  thousand  dollars'  worth  of  stock  of  such  company, 
at  its  par  value.'" 

No  company  may  be  incorporated  under  this  act  in  the 
city  or  county  of  New  York,  or  in  the  county  of  Kings,  with 
a  smaller  capital  than  one  million  dollars,  nor  in  any  other 
county  of  the  state  with  a  smaller  capital  than  five  hundred 
thousand  dollars.3 

No  such  company  shall  commence  business  until  at  least 
twenty-five  percent,  of  the  capital  has  been  paid  in,  nor  until 
it  has  deposited  with  the  Superintendent  of  the  Insurance 
Department  the  sum  of  one  hundred  thousand  dollars.3 

Article  IV. 
Banking,  Safe  Deposit,  and  Trust  Companies. 

Subdivision  l.  Banks. — Banks  of  discount  and  deposit  may 
be  organized  with  a  capital  of  not  less  than  one  hundred  thou- 
sand dollars,  and  in  places  not  exceeding  thirty  thousand 
inhabitants  with  a  capital. of  not  less  than  fifty  thousand 
dollars;  and  in  places  not  exceeding  six  thousand  inhabitants, 
with  the  approval  of  the  Superintendent  of  the  Banking 
Department,  they  may  be  organized  with  a  capital  of  not 
less  than  twenty-five  thousand  dollars.4 

A  certificate  must  be  made,  signed,  sealed  and  acknowl- 
edged by  the  corporators  which  shall  set  forth  : 

i.  The  name  assumed  to  distinguish  such  association,  and 
to  be  used  in  its  dealings. 

2.  The  place  where  the  operations  of  discount  and  deposit 
of  such  association  are  to  be  carried  on,  designating  the 
particular  city,  town  or  village. 

3.  The  amount  of  capital  stock  of  such  association  and 
the  number  of  shares  into  which  the  same  shall  be  divided. 

4.  The  names  and  places  of  residence  of  the  shareholders, 
and  the  number  of  shares  held  by  each  of  them  respectively. 

1  Laws  of  1SS6,  chap.  611,  §  3.  3  Id.  §  11. 

s  Id.  §  5.  4  Laws  of  1S82,  chap.  409,  §  29. 


22  THE   LAW   OF   CORPORATIONS. 

5.  The  period  at  which  such  association  shall  commence 
and  terminate. 

The  certificate  must  be  recorded  in  the  office  of  the  clerk 
of  the  county  where  any  office  of  such  association  shall  be 
established,  and  a  copy  filed  in  the  office  of  the  Superinten- 
dent of  the  Banking  Department.1 

Such  association  shall  have  power  to  carry  on  the  busi- 
ness of  banking  by  discounting  bills,  notes  and  other  evi- 
dences of  debt ;  by  receiving  deposits  ;  by  buying  and  selling 
gold  and  silver  bullion,  foreign  coin  and  bills  of  exchange, 
in  the  manner  specified  in  the  articles  of  association  for  the 
purposes  authorized  by  this  act ;  by  loaning  money  on  real  and 
personal  security;  and  by  exercising  such  incidental  powers 
as  shall  be  necessary  to  carry  on  such  business ;  to  choose 
one  of  their  number  as  president  of  such  association,  and  to 
appoint  a  cashier  and  such  other  officers  and  agents  as  their 
business  may  require,  and  to  remove  such  president,  cashier, 
officers  and  agents,  at  pleasure,  and  appoint  others  in  their 
places.3 

Before  commencing  business,  the  two  principal  officers 
of  the  company  must  make  an  affidavit  stating  that  the  whole 
of  the  capital  stock,  or  such  portion  as,  by  its  charter,  shall 
be  required  to  be  paid  or  secured  before  the  commencement 
of  its  operations,  has  actually  been  paid,  or  secured  to  be 
paid,  according  to  the  provisions  of  its  charter.1' 

Such  affidavit,  if  made  in  a  city,  must  be  made  before  the 
mayor  or  recorder  of  the  city,  and  if  elsewhere,  before  the 
county  judge  of  the  county  or  any  justice  of  the  Supreme 
Court  therein,  and  must  be  filed  in  the  clerk's  office  of  the 
city  and  county,  or  of  the  county,  in  which  it  is  taken.4 


1  Laws  of   1882,  chap.   409,   §  30.  practice  is  to  file  either  an  original 

The  act  does  not  in  terms  require  a  or  a  certified  copy  in  that  office, 
certificate  to  be  filed  in  the  county  '2  Id.  §  35. 

clerk's   office,  although  §  31   implies  3  Id.  §  192. 

that   this   is  done  ;    and   the   better  4  Id.  §  193. 


ORGANIZA'lI"V  23 

The  charter  will  be  void  unless  such  affidavit  is  made 
and  filed  within  a  year  of  the  time  the  charter  is  granted.1 

Before  such  a  bank  is  authorized  to  commence  business, 
the  Superintendent  of  the  Banking  Department  will  cause 
an  examination  to  be  made  to  ascertain  whether  the  requisite 
amount  of  capital  has  been  paid  in  in  cash  ;  and  when  satis- 
fied that  it  has  in  good  faith  been  subscribed  and  paid  in 
in  cash,  he  will  issue  his  certificate  to  that  effect,  authorizing 
such  bank  to  commence  business.2 

The  act  contains  no  restriction  as  to  the  number  or 
qualifications  of  the  corporators,  shareholders  or  directors  ; 
nor  as  to  the  duration  of  the  charter  ; 3  nor  as  to  the  by-laws 
that  shall  be  adopted  ;  nor  as  to  the  officers  that  shall  be 
chosen  ;  nor  as  to  the  amount  of  capital  (except  the  mini- 
mum amount)  that  shall  be  employed  ;  nor  as  to  the  number 
and  value  of  the  shares.  All  these  are  left  to  the  discretion 
of  the  members. 

Subdivision  2.  Safe-Deposit  Companies. — Any  five  or  more 
persons  may  organize  a  company  for  the  purpose  of  taking 
and  receiving  upon  deposit,  as  bailee,  for  safe-keeping  and 
storage,  jewelry,  plate,  money,  specie,  bullion,  stocks,  bonds, 
securities,  and  valuable  papers  of  any  kind  and  other  valu- 
ble  personal  property,  and  guaranteeing  their  safety,  upon 
such  terms  and  for  such  compensation  as  may  be  agreed  on 
by  such  company  and  the  respective  bailors  thereof,  and  to 
let  out  vaults  and  safes  and  other  receptacles  for  the  uses 
and  purposes  of  such  corporation. 

The  corporators  must  make,  sign  and  acknowledge  a 
certificate  which  shall  set  forth  : 

1.  The  corporate  name. 

2.  The  objects  for  which  the  corporation  shall  be  formed. 

3.  The  amount  of  capital  stock. 

4.  The  term  of  its  existence,  not  to  exceed  fifty  years. 

1  Laws  of  1882,  chap,  409,   §  194.         organized    under   the     general    laws 

2  Id.  §  18.  may  be  repealed  at  any  time  by  the 

3  The  charter  of  any   corporation       legislature. 


24  THE   LAW   OF   CORPORATIONS. 

5.  The  number  of  shares  of  which  the  stock  shall  consist. 

6.  The  number  of  trustees,  and  their  names,  residences, 
occupations  and  post-office  addresses,  who  shall  manage  the 
concerns  of  said  corporation  for  the  first  year. 

7.  The  name  of  the  place  in  which  the  operations  of  the 
corporation  are  to  be  carried  on. 

The  certificate  must  be  filed  in  the  office  of  the  clerk  of 
the  county  in  which  the  business  of  the  corporation  is  to  be 
carried  on,  and  duplicates  in  the  office  of  the  secretary  of 
state  and  in  the  banking  department  of  the  state. 

The  capital  of  such  a  company  shall  not  exceed  one  mil- 
lion dollars  nor  be  less  than  one  hundred  thousand  dollars, 
except  in  cities  or  villages  of  less  than  one  hundred  thousand 
inhabitants,  in  which  the  capital  stock  may  not  be  less  than 
ten  thousand  dollars. 

No  such  company  is  authorized  to  commence  or  trans- 
act business  until  the  whole  amount  of  the  capital  stock 
shall  have  been  paid  in.1 

There  may  not  be  less  than  five  nor  more  than  thirteen 
trustees,  who  shall  respectively  be  stockholders  of  the  com- 
pany, and  a  majority  of  whom  shall  be  citizens  of  this 
state.2 

When  the  certificates  have  been  filed  as  above,  the  in- 
corporation is  complete.3 

Subdivision  3.  Trust  Companies. — Any  number  of  persons, 
not  less  than  thirteen,  three  fourths  of  whom  are  residents 
of  this  state,  may  associate  together  for  the  purpose  of 
organizing  a  trust  company.4 

Such  persons  must  sign  and  seal  a  certificate  which  must 
state : 

1.  The  name  of  the  association. 

2.  The  place  where  its  business  is  to  be  transacted. 

1  Laws  of  1875,  chap.  613,  §  1,  as       1883,  chap.  338. 
amended  by  Laws  of  1883,  chap.  273.  3  Id.  §  2. 

8  Id.  §  3,  as  amended  by  Laws  of  4  Laws  of  1887,  chap.  546,  §  I. 


ORGANIZATION.  25 

3.  The  amount  of  capital  stock  and  the  number  of  shares 
into  which  the  same  is  to  be  divided. 

4.  The  name,  residence  and  post-office  address  of  each 
member  of  such  association. 

5.  The  term  of  existence  of  such  association,  which 
shall  not  exceed  fifty  years. 

6.  A  declaration  that  each  member  of  such  association 
will  accept  the  responsibilities  and  faithfully  discharge  the 
duties  of  a  trustee  in  such  institution,  if  elected  to  act  as 
such,  when  authorized  under  the  provisions  of  this  act.1 

A  notice  of  intention  to  organize  such  a  trust  company 
must  be  published  at  least  once  a  week  for  four  weeks  in  a 
newspaper  to  be  designated  by  the  Superintendent  of  the 
Banking  Department,  published  in  the  city  where  such  trust 
company  is  proposed  to  be  located.  This  notice  must  spec- 
ify the  names  of  the  corporators,  the  name  and  location  of 
the  company  as  set  forth  in  the  organization  certificate ; 
and  if  there  is  any  trust  company  or  trust  companies  organ- 
ized and  doing  business  in  such  city,  a  copy  of  such  notice 
must  also  be  sent  to  them  at  least  fifteen  days  before  the 
certificate  is  filled.2 

The  certificate  must  be  executed  in  duplicate  and  duly 
acknowledged,  and  within  sixty  days  thereafter  one  copy 
must  be  filed  in  the  office  of  the  clerk  of  the  county  wherein 
such  trust  company  is  proposed  to  be  located,  and  one  copy 
in  the  office  of  the  Superintendent  of  the  Banking  Depart- 
ment.3 

Upon  a  receipt  of  such  certificate  at  the  office  of  the  Su- 
perintendent of  the  Banking  Department,  if  it  is  duly  exe- 
cuted and  accompanied  by  satisfactory  evidence  of  the 
proper  service  and  publication  of  the  notice,  as  above  stated, 
he  will  indorse  the  certificate  "  filed  for  examination."  ' 

He  will  th^n  ascertain,  from  the  best  sources  of  informa- 
tion at  his  command,  the  general  fitness  of  the  persons  named 

1  Laws  of  1887,  chap.  546,  §  2.  3  Id.  §  3. 

2  Id.  §4.  4  Id.  §  5. 


26  THE    LAW   OF   CORPORATIONS. 

in  such  certificate  for  the  discharge  of  the  duties  appertain- 
ing to  such  a  trust,  and  whether  it  is  such  as  to  command 
the  confidence  of  the  community  in  which  the  company  is 
proposed  to  be  located,  and  also  whether  the  public  con- 
venience and  advantage  would  be  promoted  by  such  estab- 
lishment ; '  and  if  he  shall  be  satisfied  that  the  organization 
of  such  a  company  will  be  a  public  benefit,  he  must  within 
sixty  days  after  the  certificate  has  been  filed  by  him 
for  examination,  issue,  under  his  hand  and  official  seal,  a 
certificate  of  authorization  to  the  persons  named  therein,  or 
to  a  portion  of  them,  together  with  such  other  persons  as  a 
majority  of  them  may  in  writing  approve,  which  will  author- 
ize the  persons  named  therein  to  become  a  trust  company, 
as  designated  in  the  organization  certificate,  subject  to  the 
provisions  of  the  act  under  which  it  is  organized.  No  per- 
son may  be  named  in  such  certificate  who  has  not  made  and 
acknowledged  the  declaration  contained  in  the  sixth  para- 
graph of  the  certificate.2 

Such  certificate  of  authorization  will  be  transmitted  by 
the  Superintendent  to  the  county  clerk  of  the  county  in 
which  the  trust  company  is  to  be  located,  who  will  file  it 
and  attach  it  to  the  organization  certificate  previously  filed 
by  him,  and  the  Superintendent  will  also  file  a  duplicate 
copy  of  such  certificate  in  his  own  office.3 

If  the  Superintendent  of  the  Banking  Department  shall 
not  be  satisfied  that  the  establishment  of  a  trust  company, 
as  proposed  in  any  organization  certificate  filed  by  him,  is 
expedient  and  desirable,  he  must,  within  sixty  days  there- 
after, instead  of  giving  a  certificate  of  authorization  as  above 
stated,  give  notice  to  the  county  clerk  of  the  county  in  which 
such  trust  company  is  proposed  to  be  located,  that  he  re- 
fuses to  issue  a  certificate  of  authorization,  which  notice 
will  be  filed  by  the  county  clerk  with  the  organization  cer- 
tificate of  such  company.4 

1  Laws  of  1887,  chap.  546,  §  7.  3  Id.  §  9. 

2  Id.  §  8.  4  Id.  §  10.     The  refusal  of  the  Su- 


ORGANIZATION.  27 

Upon  the  filing  of  a  certificate  of  authorization  in  the 
county  clerk's  office,  the  persons  named  in  such  certificate, 
and  their  successors,  are  thereby  duly  and  lawfully  con- 
stituted a  body  corporate  and  politic,  and  vested  with  all 
the  powers  and  charged  with  all  the  liabilities  conferred  and 
imposed  by  the  act.1 

Before  the  Superintendent  of  the  Banking  Department 
issues  a  certificate  of  authorization,  he  will  cause  an  exami- 
nation to  be  made  to  ascertain  whether  the  requisite  capital 
has  been  paid  in  in  cash,  and  no  such  association  may  com- 
mence business  until  a  certificate  of  authorization  has  been 
granted." 

Before  entering  on  active  business  the  association  must 
file  with  the  Superintendent  of  the  Banking  Department  a 
list  of  its  shareholders,  giving  the  name,  residence,  post- 
office  address  and  number  of  shares  held  by  each  of  them 
respectively,  which  list  must  be  verified  by  the  two  principal 
officers  of  the  company.3 

The  trustees  of  such  company  may  not  be  less  than  thir- 
teen nor  more  than  twenty-four  in  number.  The  persons 
named  in  the  organization  certificate,  or  such  of  them,  re- 
spectively, as  shall  become  holders  of  at  least  ten  shares  of 
the  capital  stock,  shall  constitute  the  first  board  of  trustees, 
and  may  add  to  their  number,  not  exceeding  twenty-four, 
and  shall  continue  in  office  until  others  are  elected  to  fill 
their  places.  Within  six  months  from  the  time  when  such 
company  commences  business,  the  trustees  must  classify 
themselves  by  lot  into  three  classes,  as  nearly  equal  as  may 
be,  the  term  of  office  of  the  first  class  to  expire  on  the  third 
Wednesday  of  January  following  such  classification,  and  of 
the  other  two  classes  one  and  two  years  thereafter,  respec- 
tively.    All  future  elections  shall  be  of  a  number  to  fill  the 

perintendent  to  give  the  certificate  of  '  Laws  of   1S87,  chap.  546,  §  II. 

authorization   may  be  reviewed   by  2  Id.  §  12. 

mandamus.  8  Id.  §  13. 


28  THE   LAW   OF   CORPORATIONS. 

class  whose  term  is  about  to  expire,  and  shall  be  elected  for 
three  years.' 

The  capital  stock  of  any  such  company  must  be  at  least 
five  hundred  thousand  dollars,  provided,  however,  that  trust 
companies  with  a  capital  of  not  less  than  two  hundred 
thousand  dollars  may  be  organized  in  any  city  the  popula- 
tion of  which  does  not  exceed  one  hundred  thousand  inhabi- 
tants. The  capital  stock  must  be  divided  into  shares  of  one 
hundred  dollars  each.2 

All  companies  organized  under  this  act,  in  addition  to 
the  ordinary  powers  of  corporations  organized  under  the 
laws  of  this  state,  are  given  power  to  act  as  fiscal  or 
transfer .  agents  of  any  body  politic  or  corporation ;  to 
receive  deposits  of  trust  property  ;  to  act  as  trustee  un- 
der any  mortgage  or  bond  issued  by  any  municipality  or 
corporation,  and  to  accept  and  execute  any  other  municipal 
or  corporate  trusts  ;  to  accept  and  execute  trusts  for  married 
women  in  respect  to  their  separate  property,  and  to  act  as 
agents  for  them  in  respect  to  such  property ;  to  act,  under 
the  order  or  appointment  of  any  court  of  record,  as  guardian, 
receiver  or  trustee  of  the  estate  of  any  minor,  and  as  deposi- 
tary of  any  moneys  paid  into  court,  and  to  take,  accept  and 
execute  all  such  legal  trusts,  duties  and  powers  in  regard  to 
property  as  may  be  granted  to  it  by  such  courts,  or  by  any 
person,  corporation  or  body  politic  ;  to  invest  and  deal  in 
stocks,  bills  of  exchange,  bonds  and  mortgages  and  other 
securities  ;  and  to  act  as  executor,  trustee,  or  administrator 
of  any  deceased  person,  or  as  a  committee  of  the  estates  of 
lunatics,  idiots,  persons  of  unsound  mind  and  habitual 
drunkards.3 

1  Laws  of  1887,  chap.  546,  §  14.  3  Id.  §  21. 

2  Id.  §  19. 


ORGANIZATION. 


29 


Article  V. 


Railroad  and  Construction  Companies. 


Subdivision  1.  Domestic  Railroads.' — Any  number  of  persons, 
not  less  than  twenty-five,  may  form  a  company  for  the  pur- 
pose of  constructing,  maintaining  and  operating  a  railroad 
for  public  use  in  the  conveyance  of  persons  and  property,  or 
for  the  purpose  of  maintaining  and  operating  any  unincorpo- 
rated railroad  already  constructed  for  the  like  public  use. 

For  this  purpose  they  must  make  and  sign  articles  of 
association,  in  which  shall  be  stated  : 

1.  The  name  of  the  company. 

2.  The  number  of  years  the  same  is  to  continue. 

3.  The  places  from  and  to  which  the  road  is  to  be  con- 
structed or  maintained  and  operated. 

4.  The  length  of  such  road,  as  near  as  may  be,  and  the 
name  of  each  county  in  this  state  through  or  into  which  it  is 
made  or  intended  to  be  made. 

5.  The  amount  of   the  capital  stock  of    the   company, 


1  An  act  to  authorize  the  formation 
of  railroad  corporations  and  to  regu- 
late the  same.  Laws  of  1850,  chap. 
140.  Railroads  in  foreign  countries 
are  now  governed  by  Laws  of  1SS1, 
chap.  468  (see  next  subdivision). 
Laws  of  1875,  chap.  606,  as  amend- 
ed by  Laws  of  1881,  chap.  4S5, 
Laws  of  18S2,  chap.  393,  and  Laws  of 
1888,  chap.  514,  provide  for  the  con- 
struction and  operation  of  steam  rail- 
ways in  counties  of  the  state,  and  the 
appointment  of  commissioners  for  lay- 
ing out  the  same.  Such  commission- 
ers determine  upon  the  necessity  of 
the  railway  and  locate  its  route;  de- 
cide upon  the  plan  of  construction; 
determine  the  time  within  which  it 
shall  be  constructed  and  the  maxi- 
mum rates  of  fare ;  fix  the  capital  stock, 


the  number  of  shares  into  which  it 
shall  be  divided  and  the  percentage 
to  be  paid  at  the  time  of  subscribing; 
prepare  the  articles  of  association  and 
open  books  for  subscription ;  and  when 
the  amount  of  stock,  directed  by  them, 
has  been  subscribed,  call  a  meeting  of 
the  subscribers  for  the  purpose  of 
electing  such  a  number  of  directors 
for  the  control  and  management  of 
the  road  as  the  commissioners  may 
determine;  and  after  such  election, 
deliver  to  the  directors  a  certificate,  in 
duplicate,  of  such  organization;  and 
upon  filing  such  certificate  in  the  office 
of  the  secretary  of  state,  and  the  du- 
plicate in  the  county  clerk's  office 
where  such  road  is  located,  the  or- 
ganization of  such  corporation  is  com- 
plete. 


30  THE   LAW   OF   CORPORATIONS. 

which  shall  not  be  less  than  ten  thousand  dollars  for  every 
mile  of  road  constructed  or  proposed  to  be  constructed. 

6.  The  number  of  shares  of  which  said  capital  stock  shall 

consist. 

7.  The  names  and  places  of  residence  of  thirteen  direc- 
tors of  the  company  who  shall  manage  its  affairs  for  the  first 
year  and  until  others  are  chosen  in  their  places.1 

Each  subscriber  must  sign  the  articles  of  association, 
giving  his  place  of  residence  and  the  number  of  shares  he 
agrees  to  take.2 

When  at  least  one  thousand  dollars  of  stock  for  every 
mile  of  road  proposed  to  be  made  has  been  subscribed,  and 
ten  percent,  paid  thereon,  in  good  faith  in  cash,  to  the  directors 
named  in  the  articles,  an  affidavit  of  such  subscription  and 
payment,  and  that  it  is  intended  in  good  faith  to  construct 
or  to  maintain  and  operate  the  road,  must  be  made  by  at 
least  three  of  the  directors,  and  indorsed  on  or  annexed  to 
such  articles,  and  such  affidavit  must  be  filed  and  recorded, 
with  the  articles  of  association,3  in  the  office  of  the  secretary 
of  state  ;  and  thereupon  the  subscribers,  and  all  persons  who 
shall  afterwards  become  stockholders,  shall  be  a  body  cor- 
porate, with  all  the  privileges  of  corporations  under  the  laws 
of  this  state." 

In  case  the  whole  of  the  capital  stock  is  not  before  sub- 
scribed, the  directors  may  then  open  books  of  subscription 
to  fill  up  the  capital  stock  of  the  company,  provided,  how- 
ever, that  every  subscriber  at  the  time  of  subscription  shall 
pay  at  least  ten  per  cent,  on  the  amount  subscribed  by  him, 
in  money.5 

The  directors  must  be  thirteen  in  number,  and  each  must 

1  By  chapter   829  of  Laws  of  1872  of  the  directors  so  chosen  may  be  in- 

it  was  provided  that  when  such   arti-  serted    with    like    effect    as    though 

cles  of  association  are  made,  except  inserted  in  the  original  articles. 

the  names  and  residences  of  the  direc-  2  Laws  of  1S50,  chap.  140,  §  1. 

tors,  and    such   directors   are    subse-  3  Id.  §  2. 

quently  chosen  at  a  meeting   of   the  4  Id.  §  1. 

subscribers,  the  names  and  residences  6  Id.  §  4. 


ORGANIZATION. 


31 


be  a  stockholder  absolutely  in   his  own  right,  and  qualified 
to  vote  for  directors.1 

Subdivision  2.  Foreign  Railroads. —  Companies  may  be 
formed  for  the  purpose  of  constructing,  maintaining  and 
operating  in  any  foreign  country  a  railroad  or  railroads  for 
public  use  in  the  conveyance  of  persons  and  property,  or  for 
the  purpose  of  maintaining  and  operating  any  railroad 
already  constructed  in  whole  or  in  part  for  the  like  public 
use,  with  power  to  construct,  maintain  and  operate  in 
connection  with  such  railroad  or  railroads  a  line  or  lines  of 
telegraph  and  such  lines  of  steamboats  or  sailing-vessels  as 
may  be  proper  or  convenient  for  use  in  connection  there- 
with. 

The  corporators  must  be  at  least  ten  in  number,  and  a 
majority  of  them  inhabitants  of  this  state.2 

They  must  make  and  sign  articles  of  association,  in  which 
shall  be  stated,  in  addition  to  the  objects  for  which  the  com- 
pany is  organized,  as  expressed  above  : 

1.  The  name  of  the  company. 

2.  The  number  of  years  the  same  is  to  continue,  not 
exceeding  one  hundred  years. 

3.  The  place  from  and  to  which  the  said  line  or  lines 
shall  be  constructed,  maintained  and  operated,  as  nearly  as 
practicable. 

4.  The  amount  of  the  capital  stock  of  the  company. 

5.  The  number  of  shares  of  which  such  capital  stock  shall 
consist. 

6.  The  names  and  places  of  residence  of  not  less  than 
seven  persons,  who  shall  act  as  a  board  of  directors  for  the 
management  of  the  affairs  of  the  company  for  the  first  year 
and  until  others  are  chosen  in  their  places. 

1  Laws  of    1850,  chap.  140,  §  5,  as  directors  may  be  seven.  Laws  of  1864, 

amended  by  Laws  of  1S54,  chap.  2S2,  chap.  582,  §  3,  as  amended  by  Laws 

and  Laws  of  1873,  chap.  710;  on  roads  of  1SS3,  chap. 46. 
of  less  than  twenty  miles  in  length  the         2  Laws  Gf  1881,  chap.  468,  §  1. 


32  THE   LAW   OF   CORPORATIONS. 

Each  subscriber  must  subscribe  his  name,  place  of  resi- 
dence, and  number  of  shares  of  stock  he  agrees  to  take. 

Such  articles  of  association  must  be  approved  by  the 
governor  and  filed  in  the  office  of  the  secretary  of  state, 
and  he,  upon  payment  to  him  of  a  fee  of  fifty  dollars,  will 
cause  the  same  to  be  recorded  and  will  issue  a  certificate 
under  the  seal  of  the  state,  certifying  that  the  persons 
named  in  such  certificate,  their  associates  and  successors,  are 
legally  established  as  a  corporation  under  the  name  and  for 
the  purpose  stated  in  the  articles  of  association,  with  all  the 
powers  and  the  privileges,  and  subjects  to  all  theduties,  liabil- 
ities and  restrictions,  set  forth  in  this  act.1 

It  is  provided  that  this  certificate,  or  a  duly  certified  copy 
of  the  record  thereof,  shall  be  conclusive  evidence  of  the 
establishment  of  the  corporation  at  the  date  of  such  certifi- 
cate.8 

Upon  the  issue  of  above  certificate,  such  corporation  may 
proceed  to  organize  by  calling  a  meeting  of  the  subscribers, 
of  which  notice  shall  be  given  to  each  subscriber  of  the 
place  and  purpose  of  such  meeting,  at  least  five  days  before 
the  day  appointed  for  such  meeting.3 

When  such  corporation  shall  have  been  organized,  in 
case  the  whole  of  the  capital  stock  has  not  been  subscribed, 
the  board  of  directors  may  open  books  of  subscription  to  fill 
up  the  same,  and  may  continue  to  receive  such  subscriptions 
until  the  whole  capital  stock  is  subscribed  ;  provided,  how- 
ever, that  no  subscription  shall  be  received  unless  ten  per 
cent,  of  the  amount  subscribed  for  be  paid  to  the  directors, 
in  money,  at  the  time  of  subscription.4 

Every  corporation  formed  under  this  act  is  required  to 
maintain  its  principal  office  within  this  state,  and  to  have 
there  an  officer  or  agent  upon  whom  the  service  of  process 
may  be  made. 


1  Laws  of  1881,  chap.  468,  §  2.  3  Id.  §  6. 

3  Id.  §  3.  4  Id.  §  7. 


ORGANIZATION.  33 

It  must  also  hold  its  annual  meeting  for  the  choice  of 
directors  at  such  place  within  the  state  as  may  be  estab- 
lished by  the  by-laws  of  the  company.1 

Article  VI. 
Miscellaneous  Corporations. 

Under  this  article  are  included  the  various  laws  which  the 
legislature  has  passed  from  time  to  time  for  the  incorporation 
of  companies  for  special  purposes.  Most  of  such  laws, 
enacted  prior  to  the  Business  Act,  are  covered  by  that  act, 
and  companies  may  be  formed  under  either. 

The  method  of  organization  generally  consists  in  making 
a  certificate,  signed  and  acknowledged  in  duplicate,  by  the 
corporators,  which  should  set  forth  the  chapter,  etc.,  of  the 
act  under  which  it  is  desired  to  organize,  and  in  addition 
thereto  : 

1.  The  corporate  name. 

2.  The  objects  for  which  the  company  shall  be  formed, 
as  provided  in  the  act  under  which  it  is  proposed  to 
organize. 

3.  The  amount  of  capital  stock. 

4.  The  number  of  shares  of  which  the  stock  shall  consist. 

5.  The  time  of  its  existence. 

6.  The  number  and  names  and  residences  of  the  direc- 
tors or  trustees  who  shall  manage  the  affairs  of  the  company 
for  the  first  year,  or  until  their  successors  are  chosen. 

7.  The  place  or  places  where  the  company  shall  carry  on 
its  business. 

One  certificate  should  be  filed  in  the  office  of  the  secre- 
tary of  state  and  the  duplicate  in  the  office  of  the  clerk  of 
the  county  where  the  principal  place  of  business  of  the 
company  is  to  be  located.2 

1  Laws  of  1881,  chap.  468.  §  9.  either  in  the  text  or  in  the  foot-notes. 

2  Where  any  material  variation  from      The  laws  in  this  article  are  arranged 
this  course  is  necessary,  it  is  indicated      in  chronological  order. 


34  THE    LAW   OF   CORPORATIONS. 

Plank  Road  and  Turnpike  Companies. — Any  number  of  per- 
sons, not  less  than  five,  may  form  a  corporation  for  the  pur- 
pose of  constructing  and  owning  a  plank  road  or  turnpike. 
Notice  must  be  given,  in  at  least  one  newspaper  printed  in 
each  county  through  which  the  road  is  intended  to  be  con- 
structed, of  the  time  or  places  where  subscription  books  will 
be  opened,  and  when  stock  to  the  amount  of  at  least  five 
hundred  dollars  per  mile  of  road  has,  in  good  faith,  been 
subscribed,  the  persons  subscribing  may  sign  articles  of  asso- 
ciation, adding  thereto  the  number  of  shares  taken  by  each 
subscriber. 

Before  such  articles  of  association  can  be  filed,  at  least 
five  per  cent,  of  the  amount  of  the  stock  subscribed  must 
be  paid  in,  in  cash,  to  the  directors  named  in  the  articles, 
and  an  affidavit,  made  by  at  least  three  of  such  directors,  of 
such  payment  and  that  the  requisite  amount  of  stock  per 
mile  has  been  subscribed,  must  be  made  and  indorsed  on 
the  articles,  or  be  annexed  thereto. 

The    duration   of  such    company  cannot    exceed    thirty 
years.1 

Gas  Light  Companies. — Any  three  or  more  persons  may 
form  a  company  for  the  purpose  of  manufacturing  and  sup- 
plying gas  for  lighting  the  streets  and  public  and  private 
buildings  of  any  city,  village  or  town,  or  two  or  more  vil- 
lages or  towns,  not  over  five  miles  distant  from  each  other, 
in  this  state.  The  duration  of  such  company  cannot  exceed 
fifty  years.  The  directors  may  not  be  less  than  three  nor 
more  than  thirteen  in  number,  and  shall  be  stockholders  in 
such  company,  and  a  majority  of  them  must  be  citizens  of 
this  state.2 

Bridge  Companies. — Any  number  of  persons,  not  less  than 

1  Laws  of  1847,  chap.  210.  as  amend-  chap.  311;  and  Laws  of  1883,  chap, 
ed  by  Laws  of  1849,  chap    250.  497.     Such  a  company  may  use  elec- 

2  Laws  of  1848,  chap.  3?  as  amend-  tricity  for  the  purposes  of  lighting 
ed  by  Laws  of  1871,  chap.  95;  Laws  Laws  of  1879,  chap.  512,  as  amended 
of    1872,  chap.  374;    Laws    of    1SS1,  by  Laws  of  1882,  chap.  73. 


ORGANIZATION.  35 

five,  may  form  a  corporation  for  the  purpose  of  constructing 
and  owning  a  bridge  or  causeway  across  any  stream,  or 
channel,  or  water,  which  it  may  be  necessary  to  cross  in 
order  to  form,  in  connection  with  such  bridge  or  causeway,  a 
continuous  roadway. 

The  articles  of  association  must  be  signed  by  each  sub- 
scriber, and  must  state  the  number  of  shares  of  stock  taken 
by  him,  and  must  be  filed  in  the  offices  of  the  state  engineer 
and  surveyor  and  clerk  of  the  county  or  counties  in  which 
the  bridge  is  built ;  and  such  articles  cannot  be  filed  until 
one  fourth  of  the  capital  has  been  actually  subscribed  and 
five  per  cent,  of  that  amount  paid  in,  in  cash,  and  an  affi- 
davit of  such  subscription  and  payment  made  by  at  least 
three  of  the  directors  and  filed  with  the  articles. 

The  capital  stock  must  be  divided  into  shares  of  twenty- 
five  dollars  each,  and  the  duration  of  the  corporation  cannot 
exceed  fifty  years. 

The  directors  may  not  be  less  than  five  nor  more  than 
nine  in  number,  and  shall  respectively  be  stockholders  in 
the  company  to  the  extent  of  at  least  four  shares,  and  shall 
be  citizens  of  this  state,  and  a  majority  of  the  directors 
must  be  residents  of  the  county  or  counties  in  which  such 
bridge  shall  be  located  ;  and  every  stockholder  must  be  a 
citizen  of  the  United  States.1 

Telegraph  Companies. — Any  number  of  persons  may  asso- 
ciate and  form  a  company  for  the  purpose  of  owning  or 
constructing,  using  and  maintaining,  a  line  or  lines  of  electric 
telegraph,  whether  wholly  within  or  partly  beyond  the  limits 
of  this  state  ;  or  for  the  purpose  of  owning  any  interest  in 
any  such  line  or  lines  of  electric  telegraph,  or  any  grants 
therefor. 

The  certificate  must  be  signed  by  the  shareholders,  and 
the  number  of  shares  held  by  each  of  them  respectively 
stated  therein,  and  a  copy  must  be  filed  in  the  office  of  the 

1  Laws  of  1 84S,  chap.  259,  as  amended  by  Laws  of  1SS1,  chap.  313. 


36  THE   LAW   OF   CORPORATIONS. 

clerk  of  the  county  where  any  office  of  such    association 
shall  be  established. 

No  restrictions  are  imposed  as  to  the  amount  of  capital 
to  be  employed,  the  duration  of  the  company,  the  qualifica- 
tions of  the  corporators,  or  as  to  the  number  and  qualifica- 
tion of  the  directors.1 

Navigation  Companies. — Any  number  of  persons,  not  less 
than  seven,  may  form  a  company  for  the  purpose  of  building 
for  their  own  use,  equipping,  furnishing,  fitting,  purchasing, 
chartering,  navigating  and  owning  vessels  to  be  propelled 
solely  or  partially  by  the  power  or  aid  of  steam  or  other 
expansive  fluid  or  motive  power,  to  be  used  in  all  lawful 
commerce  or  navigation  upon  the  oceans,  seas,  sounds  and 
rivers,  navigable  by  ocean  steamers,  or  for  the  transporting 
of  passengers,  freight  and  mails. 

The  certificate  must  state  particularly  the  ports  between 
which  such  vessels  are  intended  to  be  navigated. 

The  capital  may  not  be  less  than  fifty  thousand  dollars, 
nor  more  than  four  million  dollars,  and  the  duration  of  the 
company  may  not  exceed  twenty  years. 

There  may  not  be  less  than  five  nor  more  than  nine  di- 
rectors, who  must  respectively  be  stockholders  in  such  com- 
pany and  citizens  of  the  United  States,  and  a  majority  of 
them  must  be  residents  of  this  state.2 

Building  and  Elevator  Companies. — Any  number  of  persons, 
not  less  than  five,  may  form  a  company  for  the  erection  of 
buildings,  or  for  the  laying  out  and  subdivision  of  lands  into 
building  lots  and  villa  plots,  and  the  improvement  and  sale 
thereof;  or  the  construction  or  leasing  of  elevators  and 
warehouses  for  the  storage  and  elevating  of  grain,  and  for 
the  making,  purchasing  and  selling  of  materials  for  the  con- 
struction of  buildings. 

The  capital  of  such  company  cannot  be  less  than  three 

'Laws  of  1848,  chap.  265,  as  amend-       ed  by  Laws  of  1853,  chap.    124.   and 
ed  by  Laws  of  1853,  chap.  471.  Laws  of  1875,  chap.  445. 

*  Laws  of  iS52,"chap.  22S,  as  amend- 


ORGANIZATION.  37 

thousand  dollars  nor  exceed  one  million  dollars,  and  the 
term  of  its  existence  cannot  exceed  fifty  years. 

There  must  be  a  board  of  not  less  than  three  nor  more 
than  nine  trustees,  who  shall  respectively  be  stockholders  in 
such  company  and  citizens  of  the  United  States,  and  a 
majority  of  whom  shall  be  citizens  of  this  state.1 

Ferry  Companies. — -Any  three  or  more  persons  may  form 
a  company  for  the  purpose  of  conducting  and  managing  a 
ferry. 

The  certificate  must  state,  in  addition  to  the  matters 
ordinarily  contained  therein,  the  places  to  and  from  which 
the  ferry  established,  or  to  be  established,  shall  run. 

The  duration  of  such  company  cannot  exceed  fifty 
years.  The  directors  may  not  be  less  than  three  nor  more 
than  fifteen  in  number,  and  each  must  be  a  stockholder  in 
the  company  and  a  citizen  of  the  United  States,  and  a 
majority  must  be  citizens  of  this  state. 

No  such  company  is  authorized  to  commence  business 
until  at  least  one  half  of  its  capital  has  actually  been  paid 
in,  and  an  affidavit  of  such  payment  sworn  to  by  a  majority 
or  the  directors  has  been  filed  in  each  of  the  offices  in  which 
the  certificate  of  incorporation  is  required  to  be  filed.2 

Inland  Navigation  Companies. — Any  five  or  more  persons 
may  form  a  company  for  the  purpose  of  building  for  their 
own  use,  equipping,  furnishing,  fitting,  purchasing,  charter- 
ing or  owning  steam,  sail  or  other  boats,  ships  or  vessels,  or 
property  to  be  used  in  lawful  business,  commerce,  trade  or 
navigation  upon  the  lakes  or  rivers,  and  for  the  carriage, 
transportation  or  storing  of  lading,  freight,  mails,  property 
or  passengers  on  such  lakes  and  rivers. 

The  capital  of  such  company  may  not  be  less  than  three 
thousand  dollars  nor  more  than  two  million  dollars,  and  the 
time  of  its  duration  may  not  exceed  twenty  years. 


1  Lawsof  1853,  chap.  117,  as  amend-     2  Laws  of  1853,  chap.  135. 
ed  by  Laws  of  18S3,  chap.  238. 


38  THE   LAW   OF   CORPORATIONS. 

There  may  not  be  less  than  three  nor  more  than  thirteen 
directors,  who  shall  respectively  be  stockholders  of  such  com- 
pany.1 

Guano  Companies. — Any  five  or  more  persons  may  form  a 
company  for  the  purpose  of  mining  the  article  of  ammoniated 
or  other  guano,  and  importing,  exporting,  buying  or  selling 
the  same,  and  purchasing,  chartering  and  navigating  such 
steam  or  sailing  vessels,  and  the  purchasing  of  any  such  real 
or  personal  estate  as  may  be  necessary,  proper  or  convenient 
in  transacting  such  business. 

The  duration  of  such  company  cannot  exceed  thirty 
years.  The  trustees  may  not  be  less  than  five  nor  more 
than  nine  in  number,  and  each  must  be  a  stockholder  in  the 
company  and  a  citizen  of  the  United  States,  and  a  majority 
must  be  citizens  of  this  state.8 

Skating  Parks  and  Sporting  Grounds. — Any  number  of  per- 
sons, not  less  than  seven,  may  form  a  company  for  the  pur- 
pose of  constructing  parks  to  be  used  for  skating  and  other 
lawful  sports. 

The  duration  of  such  company  cannot  exceed  fifty 
years,  and  the  capital  must  be  divided  into  shares  of  twenty- 
five  dollars  each. 

Each  subscriber  to  the  articles  of  association  must  add 
to  his  name  and  residence  the  number  of  shares  of  stock 
taken  by  him.  The  articles  of  association  cannot  be  filed 
until  one  fourth  of  the  capital  stock  has  been  subscribed, 
nor  until  at  least  one  twentieth  has  been  actually  paid  in  to 
the  directors  in  cash,  and  an  affidavit  of  such  payment  made 
by  at  least  three  of  such  directors  and  annexed  to  or  in- 
dorsed on  such  articles  of  association.  They  must  then  be 
filed  in  the  office  of  the  state  engineer  and  surveyor,  and 
in  the  office  of  the  county  clerk. 

The  directors  may  not  be  less  than  five  nor  more  than 
nine  in  number,  and  each  must  be  a  stockholder  owning  at 

'  Lawsof  1854,  chap.  232,asamend-  9  Laws  of  1S57,  chap.  546. 

ed  by  Laws  of  1878,  chap.  394. 


ORGANIZATION.  39 

least  four  shares  of  stock  and  must  be  a  citizen  of  this  state, 
and  a  majority  of  the  directors  must  be  residents  of  the 
county  where  the  real  estate  of  such  corporation  is  located.' 

Stage-Coach  Companies. — Any  number  of  persons,  not  less 
than  five,  may  form  a  company  for  the  purpose  of  establish- 
ing, maintaining  and  operating  any  stage  or  omnibus  route 
for  public  use  in  the  conveyance  of  persons  and  property 
elsewhere  than  in  the  city  of  New  York,  or  for  the  purpose 
of  maintaining  and  operating  any  such  stage  route  already 
established. 

The  articles  of  association,  in  addition  to  the  statements 
generally  made  therein,  must  state,  as  nearly  as  practicable, 
its  route,  and  each  subscriber  shall  add  his  place  of  residence 
and  the  number  of  shares  he  agrees  to  take. 

When  at  least  ten  per  cent,  of  the  capital  has  been  paid 
in,  and  an  affidavit  indorsed  on  such  articles  or  annexed 
thereto  stating  the  amount  of  stock  subscribed  and  the  fact 
of  such  payment,  and  that  it  is  intended  in  good  faith  to 
maintain  and  operate  the  stage  route  or  routes  mentioned  in 
such  articles  of  association  has  been  made  by  at  least  three 
of  the  directors,  a  copy  must  be  filed  in  the  office  of  the 
town  clerk  of  each  of  the  towns  through  which  the  stage 
route  is  intended  to  run. 

In  case  the  whole  of  the  capital  has  not  been  then  sub- 
scribed, the  directors  may  open  books  of  subscription  to  fill 
up  the  capital  stock,  provided  that  every  subscriber  at  the 
time  of  subscribing  shall  pay  to  the  directors  ten  per  cent, 
upon  the  amount  subscribed  by  him. 

The  directors  may  not  be  less  than  three  nor  more  than 
five  in  number,  and  each  must  be  a  stockholder,  owning 
stock  absolutely  in  his  own  right.  No  other  restrictions  are 
imposed.3 

Driving-Park  and  Agricultural  Associations.  —  Any  number  of 
persons,  not  less  than  six,  citizens  of  this  state  and  of  full  age, 

1  Laws  of  1S61,  chap.  149.  2  Laws  of  1S67,  chap.  974. 


40  THE    LAW   OF   CORPORATIONS. 

may  form  a  company  for  the  purpose  of  maintaining  a  driv- 
ing park  or  agricultural  association  in  this  state. 

The  articles  of  association  cannot  be  filed  until  the 
whole  of  the  capital  stock  has  been  subscribed,  and  one 
twentieth  of  the  amount  has  been  actually  paid  in,  in  cash, 
and  an  affidavit  of  such  subscription  and  payment  made  by 
at  least  three  of  the  directors  and  attached  thereto,  or 
indorsed  thereon,  and  filed  with  such  articles. 

The  capital  stock  must  be  divided  into  shares  of  not  less 
than  ten  dollars  nor  more  than  one  hundred  dollars  each. 

The  officers  of  such  association  must  consist  of  a  presi- 
dent, at  least  one  vice-president,  a  secretary,  a  treasurer  and 
any  number  of  directors  which  is  divisible  by  three,  not 
exceeding  fifteen,  —  the  directors  to  be  divided  into  three 
classes,  one  third  to  be  elected  annually.1 

Homestead  Corporations. — Any  number  of  persons,  not  less 
than  three,  may  form  a  company  for  the  purpose  of  accumu- 
lating funds  for  the  purchase  of  real  estate,  paying  off  en- 
cumbrances thereon,  the  improvement  and  subdivision 
thereof  into  lots  or  parcels  suitable  for  homesteads,  and  the 
distribution  of  such  lots  or  parcels  among  the  shareholders. 

No  restrictions  are  imposed  by  the  act  as  to  the  number 
or  qualification  of  the  directors  or  trustees,  nor  as  to  the 
amount  of  capital  stock  or  the  number  of  shares,  nor  as  to 
the  time  of  its  existence." 

Water-Works  Companies. — Any  number  of  persons  not  less 
than  seven  may  form  a  water-works  company,  to  supply 
water  to  any  of  the  towns  or  villages  and  to  the  inhabitants 
thereof  in  this  state. 

Before  making  their  certificate,  such  persons  must  present 
to  the  town  or  village  authorities  an  application  setting  forth 
the  persons  who  propose  to  form  such  company,  the  pro- 
posed capital  stock  and  number  and  character  of  the  shares, 
and  the  sources  from  which  water  is  intended  to  be  supplied, 

1  Laws  of  1872,  chap.  248,  as  amend-  s  Laws  of  1872,  chap.  820. 

ed  by  Laws  of  1872,  chap.  609. 


ORGANIZATION.  41 

and  shall  request  the  authorities  of  such  town  or  village  to 
consider  the  application  to  supply  it  with  pure  and  whole- 
some water;  and  such  authorities  must  determine,  within 
thirty  days,  whether  such  application  shall  be  granted,  and 
not  until  such  application  is  granted  shall  a  certificate  of 
organization  be  made  and  filed. 

The  certificate,  filed  in  the  office  of  the  secretary  of 
state,  must  recite,  in  addition  to  the  matters  ordinarily 
contained  therein,  the  fact  of  such  application  and  deter- 
mination, and  such  certificate  must  be  subscribed  by  the 
persons  by  whom  such  application  was  made  and  be  sworn 
to  by  a  majority  of  such  persons. 

The  act  contains  no  restrictions  as  to  the  number  or 
qualifications  of  the  directors  or  trustees,  nor  as  to  the 
amount  of  capital  stock  or  the  duration  of  the  company. 

Such  a  company  may  lay  and  maintain  its  pipes  and 
hydrants  in  any  of  the  highways  of  the  town  from  which 
the  consent  has  been  obtained,  and  may  contract  with  such 
town,  or  any  other  town  in  the  county  in  which  it  shall  be 
organized,  to  supply  it  with  water.1 

Railroad- Supply  Companies. — Any  nine  or  more  persons  may 
form  a  corporation  in  the  manner  specified  or  required  in  the 
Manufacturing  Corporations  Act 2  for  the  purpose  of  building, 
manufacturing,  owning,  furnishing,  letting,  selling  and  main- 
taining locomotive  engines,  cars,  rolling-stock  and  machin- 
ery to  be  used  or  operated  upon  railways,  or  for  any  one  or 
more  of  such  purposes.3 

1  Laws  of  1873,  chap.  737,  as  amend-  lages  in   this  state  are  authorized  to 

ed  by  Laws  of  18S1,  chap.  213.     Such  construct  water-works,  and  may  take 

a    company,    when    fully    organized,  any  of  the  works  constructed  by  any 

may  acquire   any  land    necessary  to  corporation,  which  they  may  need,  at 

carry  out  the   purposes  for  which  it  an  appraised  valuation, 

was  formed.    Laws  of  1876,  chap.  415,  *  Ante,  p.  6. 

as  amended  by  Laws  of  1S85,  chap.  3  Laws  of  1S73,  chap.  814.  Such  a 
422.  None  of  the  provisions  of  this  company  may  lay  and  maintain  such 
act  apply  to  any  towns  in  the  county  railway  tracks,  not  exceeding  one  mile 
of  Kings.  in  length,  as  may  be  necessary  to  con- 
By  Laws  of   1875,  chap.   1S1,  vil-  nect  its  works  with  any  railroad  within 


42  THE    LAW    OF   CORPORATIONS. 

Hotel  Companies. — Any  five  or  more  persons  may  form  a 
company  for  the  purpose  of  erecting  buildings  for  hotel 
purposes,  or  for  keeping  hotels,  or  for  either  or  both  of  such 
purposes. 

The  capital  of  such  company  may  not  be  less  than  ten 
thousand  dollars  nor  more  than  one  million  dollars,  and  its 
duration  may  not  exceed  fifty  years. 

There  may  not  be  less  than  three  nor  more  than  nine 
trustees,  who  must  respectively  be  stockholders  in  such 
company  and  citizens  of  the  United  States,  and  a  majority 
of  whom  must  be  citizens  of  this  state.1 

Pipe-Line  Companies. — Any  number  of  persons,  not  less 
than  twelve,  may  form  a  company  for  the  purpose  of  con- 
structing and  operating,  for  the  public  use,  lines  of  pipe  for 
the  conveying  or  transporting  therein  petroleum,  gas,  liquids, 
or  any  products  or  property,  or  for  the  purpose  of  maintain- 
ing and  operating  any  line  of  pipe  already  constructed.  The 
capital  of  such  company  may  not  be  less  than  fifteen  hundred 
dollars  for  every  mile  of  pipe  constructed,  or  proposed  to  be 
constructed. 

The  certificate,  in  addition  to  the  matters  usually  con- 
tained, must  state  as  near  as  may  be  the  length  of  such  pipe- 
line and  the  places  from  and  to  which  it  is  to  be  constructed 
or  maintained  and  operated,  and  the  name  of  each  county 
in  this  state  through  and  into  which  it  is  to  be  constructed, 
and  must  also  state  the  number  of  shares  taken  by  each 
subscriber. 

No  such  articles  of  association  can  be  filed  until  at  least 
ten  hundred  and  fifty  dollars  of  stock  for  every  mile  of  pipe- 
line proposed  to  be  constructed  or  maintained  has  been 
subscribed,  and  twenty-five  per  cent,  thereon  paid  in,  in  cash, 
and  an  affidavit  indorsed  thereon  or  annexed  thereto,  made 
by  at  least  three  of  the  directors,  which  shall  state  that  such 

the  state,  and  take  the  necessary  land       or  Kings.     Laws  of  1880,  chap.  267. 
therefor.     This,    however,    does   not  '  Laws  of  1874,  chap.  143. 

apply  to  the  counties  of    New  York 


ORGANIZATION.  43 

subscription  and  payment  has  been  made,  and  that  it  is  in- 
tended in  good  faith  to  construct  or  to  maintain  and  oper- 
ate such  line,  and  that  such  corporation  was  not  projected 
and  formed  with  the  intent  or  for  the  purpose  of  selling  or 
conveying  its  franchise  to  any  person  or  corporation,  nor 
with  intent  or  for  the  purpose  of  injuring  any  person  or 
corporation,  nor  for  any  fraudulent  purpose  ;  and  such 
affidavit  must  be  taken  and  held  as  part  of  the  articles  of 
association. 

There  must  be  a  board  of  seven  directors,  and  each  di- 
rector must  be  a  stockholder  absolutely  in  his  own  right. 
No  other  restriction  or  qualification  is  imposed.1 

Tramway  Companies. — Any  number  of  persons,  not  less 
than  thirteen,  may  form  a  company  for  the  purpose  of  con- 
structing, maintaining  and  operating  an  elevated  tramway, 
constructed  of  poles,  piers,  wire,  rods,  ropes,  bars  or  chains 
for  the  transportation  of  freight  in  suspended  buckets,  cars, 
or  other  receptacles,  for  hire. 

The  articles  of  association  must  be  subscribed  with  the 
number  of  shares  and  place  of  residence  of  each  subscriber, 
and,  in  addition  to  the  matters  usually  contained  therein, 
must  state  the  places  from  and  to  which  the  tramway  is  to 
be  constructed,  maintained  and  operated  ;  its  length,  as  near 
as  may  be;  and  the  name  of  each  county  in  this  state  through 
or  in  which  it  is  made  or  intended  to  be  made ;  and  when 
properly  made  and  executed  must  be  filed  in  the  office  of 
the  secretary  of  state. 

The  first  section  of  the  act  provides  that  the  directors  to 
manage  the  affairs  of  the  company  for  the  first  year  shall 
not  be  less  than  three  in  number.  By  the  fourth  section  it 
is  provided  that  there  shall  be  a  board  of  three  directors. 

When  organized,  such  a  corporation  may  acquire  land 

1  Laws  of  187S,  chap.  203.  The  necessary  for  its  use.  It  does  not, 
act  provides  for  the  condemnation  and  however,  apply  to  the  city  of  New 
acquisition  of   such  land  as  may  be       York. 


44  THE   LAW   OF   CORPORATIONS. 

for  its  use  in  the  manner  provided  for  its  acquisition  by 
railroad  corporations. 

It  is  expressly  excepted  from  the  provision  of  the  Re- 
vised Statutes  requiring  corporations  to  commence  business 
within  one  year  from  the  time  of  organization.1 

Article  VII. 
General  Provisions. 

The  following  provisions,  except  when  otherwise  indi- 
cated, are  applicable  to  all  corporations  organized  under  the 
general  laws  : 

Amending  Certificate. — If  by  reason  of  the  omission  of  any 
matter  required  to  be  stated  in  a  certificate  of  any  corpora- 
tion organized  under  a  general  act  any  informality  exists 
therein,  the  directors  may  make  and  file  an  amended  certifi- 
cate to  conform  to  the  general  act  under  which  it  was  organ- 
ized, and  it  will  then  be  deemed  a  corporation  from  the  time 
of  filing  the  original  certificate.  No  suit  pending  against 
such  a  corporation  is  affected,  and  no  rights  accrued  are  im- 
paired by  the  filing  of  such  amended  certificate.2 

The  purpose  of  the  statute  is  to  remedy  patent  omissions, 
that  is,  the  omission  of  things  which  are  required  to  be  stated, 
and  which,  being  omitted,  make  the  certificate  imperfect  on 

its  face.3 

Filing  and  Recording  Certificate. — All  certificates  of  incorpo- 
ration required  to  be  filed  in  the  office  of  the  secretary  of 
state  or  in  the  office  of  any  county  clerk,  must  be  recorded 
in  such  office ;  and  it  is  provided  that  no  certificate  shall  be 

1  Laws  of  1888,  chap.  462.  seem  that  any  defect  in  the  organiza- 

2  Laws  of  1870,  chap.  135.  lion  of  a  corporation  would  be  cured 

3  In  re  N.  Y.,  L.  &W,  R.R. Co. ,25  by  a  subsequent  recognition  of  the 
Hun,  556,  it  was  held,  therefore,  corporation  by  the  legislature.  B.  R. 
that  a  change  in  the  route  of  a  rail-  &  U.  R.  R.  Co.  v.  Barnard,  31  Barb, 
road   could  not  be  effected  by  filing  25S. 

an    amended    certificate.     It    would 


ORGANIZATION. 


45 


filed  or  recorded  until  the  fee  for  filing  and  recording  is 
paid.' 

It  was  held,  however,  in  Raisbtxk  v.  Oesterricher?  that 
the  failure  to  file  the  duplicate  certificate  of  a  manufacturing 
corporation  in  the  office  of  the  secretary  of  state  was  not 
sufficient  to  render  the  members  partners  between  them- 
selves and  liable  to  account  as  such  ;  but  a  corporation  de 
jure,  which  may  successfully  maintain  itself  against  an  in- 
quiry on  the  part  of  the  state,  is  not  created  until  all  the 
formalities  required  by  the  act  of  organization  are  complied 
with.3 

Organization  Tax. — Every  corporation  having  capital  stock 
divisible  into  shares,  except  literary,  scientific,  medical  and 
religious  corporations  and  corporations  organized  under  the 
banking  laws  of  the  state,  or  under  the  act  for  the  incorpo- 
tion  of  building,  mutual  loan  and  accumulating  fund  asso- 
ciations,4 must  pay  to  the  state  treasurer  a  tax  of  one  eighth 


1  Laws  of  18S1,  chap.  22.  The  fee 
for  recording  is  the  same  as  that  for 
recording  deeds.  Ibid.  The  fees  of 
the  Secretary  of  State  are  established 
by  Laws  of  1S82,  chap.  156,  and,  so 
far  as  relates  to  corporations,  are  as 
follows  : 

For  filing  every  certificate  of  in- 
corporation under  chap.  40,  Laws 
184S,  ten  dollars. 

For  filing  every  certificate  of  in- 
corporation of  gaslight  companies, 
turnpike  companies,  waterworks 
companies,  ferry  companies,  navi- 
gation companies,  telegraph  com- 
panies, telephone  companies,  hotel 
companies  and  co-operative  associa- 
tions, and  of  every  business  corpora- 
tion or  company  (except  as  herein- 
after stated),  ten  dollars. 

For  filing,  recording  and  issuing 
all  the  necessary  papers  in  and  about 
the  organization  of  business  corpo- 
rations formed  under  chap.  611  Laws 


1875,  ten  dollars  ;  and  for  a  certified 
copy  of  the  certificate  of  incorpora- 
tion of  such  last-named  business  cor- 
porations, three  dollars. 

For  filing  articles  of  association  of 
a  railroad  to  be  constructed  in  a 
foreign  country  and  issuing  certifi- 
cate of  incorporation  and  recording 
the  same,  fifty  dollars. 

For  filing  articles  of  association  of 
every  other  railroad,  and  for  filing 
every  agreement  of  consolidation  be- 
tween two  or  more  railroads,  twenty- 
five  dollars. 

2  Common  Pleas.  Sp.  Term  187S, 
4  Abb.  N.  C.  444.  As  to  the  general 
rule  that  members  of  a  corporation 
cannot  set  up  a  defect  in  its  organi- 
zation to  escape  any  of  the  liabilities 
attaching  thereto,  see  Chap.  VIL, 
post. 

3  £.&>  A.  R.  R.  Co.  v.  Cary,  26  N. 
Y.  75;  Childs  v.  Smith,  46  id.  34. 

4  Laws  of  1S51,  chap.  122 


46  THE    LAW    OF   CORPORATIONS. 

of  one  per  cent,  upon  the  amount  of  its  capital  stock  or  upon 
any  subsequent  increase  thereof ;  and  no  such  company  is 
permitted  to  exercise  any  corporate  powers,  nor  will  the 
secretary  of  state  or  county  clerk  file  such  certificate,  until 
such  tax  is  paid.1 

Where  a  new  company  is  formed  out  of  an  old  one,  but 
with  increased  capital  stock,  it  is  subject  to  a  tax  on  the 
whole  of  its  capital.2 

The  Corporate  Name. — Several  of  the  acts  for  the  organiza- 
tion of  corporations  provide  that  they  shall  not  have  the 
same  name  as  an  existing  corporation  in  this  state,  or  so 
nearly  resembling  it  as  to  be  calculated  to  deceive  ;3  and  the 
Superintendent  of  the  Insurance  Department  is  required  to 
reject  the  name  of  any  insurance  company  which  he  shall 
deem  to  be  so  nearly  similar  to  any  already  in  use  as  to  lead 
to  confusion  or  uncertainty  on  the  part  of  the  public.4  But 
even  in  the  absence  of  any  statutory  provision,  no  corpora- 
tion would  be  allowed  to  assume  a  name  so  closely  resem- 
bling that  of  another  corporation  organized  within  the  state 
as  to  be  likely  to  deceive;5  and  an  injunction  will  issue  to 
prevent  the  use  of  such  a  corporate  name,  or  a  name  nearly 
approaching  it,  by  an  individual.6 

In  corporations  organized  under  the  Business  Act,  where 
it  is  desired  to  limit  the  liability  of  the  stockholders,7  the 
name  of  the  company  must,  in  every  case,  have  as  its  last  word 
the  word  "  limited,"  and  such  a  corporation  must  keep  its 
full  name  affixed,  in  legible  characters,  outside  of  its  place 
or  places  of  business,  and  it  must  also  be  stated  in  every 
notice,  advertisement  qnd  other  official  publications  of  such 

1  Laws    of  18S6,    chapter    143,    as  5  American    Grocer  v.   Grocer  Pub- 

amended  by  Lawsof  1SS7,  chap.  284.  lis  king  Co.,   25  Hun,  398. 

'J  People  exrel.Sc/iurz  v. Cook, People  6  New   York  Cab  Co.  v.  Mooney,    15 

ex  rel.  Mertens,  v.  id.,  no  N.  Y.  443.  Abb.    N.   C.   152;  Supreme   Ct.  Sp. 

3  This  is  substantially  the  language  Term,    1884. 

of   the    Business  Corporations  Act,  7  As   to   the  liability  of  stockhold- 

Laws  of  1875,  chap.  611,  §4.  ers  in  the  different  kinds  of  corpora- 

4  Laws  of  1S77,  chap.  211.  tions,  see  Chap.  WW., post. 


ORGANIZATION'.  47 

company,  and  in  all  its  bills  of  exchange,  promissory  notes, 
checks,  orders  for  money,  bills  of  lading,  invoices,  receipts* 
letters  and  other  writings  used  in  the  transaction  of  the 
business  of  the  corporation.1 

Within  the  foregoing  limits,  any  name  may  be  assumed  to 
designate  a  corporation  organized  under  the  laws  of  this  state.2 

Forfeiture  for  Non-User. — -It  is  provided  in  the  Revised 
Statutes,3  that  if  any  corporation  shall  not  organize  and  com- 
mence the  transaction  of  its  business  within  one  year  from 
the  date  of  its  incorporation,  its  corporate  powers  shall  cease. 

The  true  construction  of  this  section  would  probably 
refer  the  business  here  spoken  of  to  such  as  it  might  lawfully 
do  under  its  act  of  incorporation,  and  the  failure  to  do  this 
business,  although  it  might  do  other  business,  would  sustain 
an  action  by  the'people  for  its  dissolution.4 

Railroads  are  expressly  excepted  from  the  operation  of 
this  section.6 

The  Choice  of  Laws  under  which  to  Organize. — Generally,  in 
the  incorporation  of  insurance  and  guarantee  companies, 
banking,  safe  deposit  and  trust  companies,  and  railroad  and 
construction  companies,  no  room  for  choice  is  offered  in  the 
selection  of  the  act  under  which  such  a  company  may  organ- 
ize ;  but  the  incorporation  of  many  companies  for  other  pur- 
poses than  those  above  mentioned  may  be  effected  under 
different  laws.  Thus,  a  company  for  the  purpose  of  doing 
any  manufacturing  business  may  be  incorporated  under  the 
Act  of  1848, "  or  under  the  Business  Act  of  1875, 7  and  differ- 
ent considerations  will  govern  in  the  selection.  For  instance, 
the  latter  act  is  somewhat  more  onerous  in  its  requirements 
for  organization  than  the  former,  and  the  liabilities  of  trus- 
tees are  somewhat  greater  ;8  while,  on  the  other  hand,  the 
liability  of  the  stockholder  is,  in  some  respects,  less.0 

1  Laws  of  1875,  chap.  611,  £  35.  6  Ante,  p.  2;  app.  A,  post. 

2  See  ante.  p.  7.  1  Ante,  p.  8;  app.  B,  post. 

3  Part  1.  chap.  XVIII.,  title  3.  §  7.  8  See    Liabilities    of    Officers    and 

4  People  v.  Troy  House  Co.,  44  Barb.  Directors,  Chap.  V.,  post. 

625.  9  See   Liabilities    of   Stockholders, 

5  Laws  of  1846,  chap.  155.  Chap.  VII..  post. 


48 


THE   LAW    OF   CORPORATIONS. 


The  same  maybe  said,  mutatis  mutandis,  as  to  the  choice 
between  the  Business  Act  and  the  various  special  acts  enu- 
merated in  the  last  article.  The  Business  Act  is  broad 
enough  in  its  terms  to  cover  any  of  the  corporations  pro- 
vided for  in  the  other  acts,  except  those  containing  provi- 
sions for  the  appropriation  of  land  ;  and  with  this  exception, 
so  far  as  laws  enacted  prior  to  the  Business  Act1  are  con- 
cerned, a  corporation  may  be  organized  under  either.  Where, 
however,  a  law  has  been  passed  for  the  organization  of  cor- 
porations for  special  purposes,  subsequent  to  such  a.  general 
act,  it  is  probable  that  a  company  for  such  special  purposes 
could  be  incorporated  only  under  the  special  act.a 


1  This  act  was  passed  June  21st, 
1875. 

'2  A  special  act  is  not  repealed  by  a 
general  act  covering  the  sameground, 
unless  a  clear  intention  to  repeal  it  is 
manifest  in  the  act  itself.  Matter  of 
D.  & H.  C.  Co.,  69  N.  Y.  209;  Village 
of  Gloversville.  v.  Howell,  70  id.  287  ; 
Banns  v.  Brown,  So  id.  527;  McKen- 
na  v.  Edmund  stone,  91  id.  231.  But 
where  a  special  act  is  passed  subse- 
quent to  a  general  act  covering  the 
same  subject,  a  different  rule  pre- 
vails. As  was  said  by  Earl,  J.,  in 
Heckmanh  v.  Pinkney  (81  N.  Y.  211, 
2i5):'"It  is  the  undoubted  rule  that  re- 
peals by  implication  are  not  favored. 
Where  there  is  no  repealing  clause 
in  a  later  statute,  and  that  and  a  for- 
mer one  can  stand  together,  and  both 
have  effect,  they  will  generally  both 
be  held  to  be  in  force.  But  where  a 
later  statute,  not  purporting  to 
amend  a  former  one,  covers  the 
whole  subject,  and  was  plainly  in- 
tended to  furnish  the  only  law  upon 
the  subject,  the  former  statute  must 
be  held  repealed  by  necessary  impli- 
cation." 

Following  the  rule  thus  laid  down, 


it  was  held  in.  People  ex  rel.  Eden  Mil- 
see  Americain  Co.  (Lim.)  v.  Carr  (36 
Hun.  4S8,  aff  d  on  opinion  below, 
100  N.  Y.  641)  that  the  provisions  of 
the  act  of  '875,  prescribing  the  man- 
ner in  which  business  corporations 
might  reduce  their  capital  stock,  was 
repealed  by  implication  by  the  pas- 
sage of  chap.  264  of  the  Laws  of  1878, 
entitled  "An  act  to  authorize  corpo- 
rations organized  under  the  laws  of 
this  state  to  reduce  their  capital 
stock  ;"  and  that  from  and  after  the 
passage  of  the  latter  act  all  corpo- 
rations thereafter  organized  could 
only  reduce  their  capital  stock  by 
complying  with  its  terms  and  provi- 
visions. 

The  effect  of  this  rule  would  be  to 
prevent  the  organization  of  com- 
panies under  the  Business  Act  for 
such  purposes  as  "searching  and 
guaranteeing  titles  to  real  estate," 
and  perhaps  "guaranteeing  the  col- 
lection of  claims  "  after  the  passage 
of  special  acts  for  the  organization  of 
companies  for  those  purposes.  See 
ante,  pp.  18,20;  but  see  reorganization 
of  corporations  under  the  Business 
Act,  Chap.  II.,  post. 


POWERS  AND    PRIVILEGES.  49  ^y/ 


CHAPTER    II. 
POWERS   AND   PRIVILEGES. 

Art.       I.   General  Powers  and  Privileges. 
Art.     II.   Incidental  Powers  and  Privileges. 
Art.  III.  Special  Powers  and  Privileges. 

Article  I. 
General  Powers  and  Privileges. 

The  Revised  Statutes  enumerate  the  following  general 
powers  as  belonging  to  every  corporation  :' 

General  Powers. —  I.  Every  corporation,  as  such,  has 
power  : 

1.  To  have  succession  by  its  corporate  name  for  the 
period  limited  in  its  charter  ;  and  when  no  period  is  limited, 
perpetually. 

2.  To  sue  and  be  sued,  complain  and  defend,  in  any  court 
of  law  or  equity.2 

3.  To  make  and  use  a  common  seal,  and  alter  the  same 
at  pleasure. 

4.  To  hold,  purchase,  and  convey  such  real  and  personal 
estate  as  the  purposes  of  the  corporation  shall  require,  not 
exceeding  the  amount  limited  in  its  charter. 

5.  To  appoint  such  subordinate  officers  and  agents  as 
the  business  of  the  corporation  shall  require,  and  to  allow 
them  a  suitable  compensation. 

6.  To  make  by-laws,  not  inconsistent  with  any  existing 
law,  for  the  management  of  its  property,  the  regulation  of 
its  affairs,  and  for  the  transfer  of  its  stock. 

1  Revised    Statutes,    part    I.   chap.  -  In  regard  to  suits  by  and  against 

xviii.,  title  3.  .  corporations,  see  Chap.  VIII., post. 


50  THE   LAW    OF   CORPORATIONS. 

In  what  Corporations  to  Vest. — 2.  The  powers  enumerated  in 
the  preceding  section  shall  vest  in  every  corporation  that 
shall  hereafter  be  created,  although  they  may  not  be  speci- 
fied in  its  charter  or  in  the  act  under  which  it  shall  be  incor- 
porated. 

What  other  Powers  to  be  Possessed. — 3.  In  addition  to  the 
powers  enumerated  in  the  first  section  of  this  title,  and  to 
those  expressly  given  in  its  charter,  or  in  the  act  under  which 
it  is  or  shall  be  incorporated,  no  corporation  shall  possess 
or  exercise  any  corporate  powers,  except  such  as  shall  be 
necessary  to  the  exercise  of  the  powers  so  enumerated  and 
given. 

That  corporations  have  the  powers  expressly  conferred 
on  them  by  their  charters,  and  such  others  as  are  necessarily 
incidental  to  the  exercise  of  those  powers,  is  an  elementary 
proposition.  The  difficulties  lie  in  the  application  of  the 
rule  to  particular  cases,  and  in  that  respect  it  is  one  of  the 
difficult  problems  that  is  constantly  presenting  itself  to  the 
courts,  but  which,  as  coming  within  the  general  law  of  cor- 
porations, rather  than  as  being  affected  by  statutory  pro- 
visions, does  not  come  within  the  scope  of  this  work. 

Corporate  Name. — As  we  have  seen,1  the  latitude  allowed  a 
corporation  in  its  choice  of  name  is  practically  unlimited,  and 
it  is  unnecessary  to  consider  that"  subject  further  here.  The 
manner  of  changing  the  corporate  name  will  be  considered 
in  Art.  III.  of  this  chapter. 

Duration. — When  no  time  is  limited  as  to  the  duration  of 
a  corporation  either  in  its  charter  or  in  the  act  under  which 
it  is  organized,  its  duration  is  perpetual  {supra) ;  subject,  how- 
ever, to  the  provisions  that  the  charter  of  every  corporation 
organized  under  the  laws  of  this  state  is  subject  to  altera- 
tion, supervision  and  repeal,  in  the  discretion  of  the  legisla- 
ture.2 

1  Ante,  p.  46.  2  Rev.   Stat,   part   I.    chap,  xviii., 

title  3,  §  8. 


POWERS   AND    PRIVILEGES.  5I 

Extending  Term  of  Existent*.— Manufacturing  Corporations 
Any  company  formed  under  the  Manufacturing  Act  which 
may  have  fixed  the  duration  of  its  existence  for  less  than 
fifty  years,  may  by  vote  of  the  stockholders  representing  a 
majority  of  the  stock  extend  the  term  of  its  corporate  exist 
ence  from  time  to  time  to  a  period  not  longer  in  the  ago,-,, 
gate  than  it  could  have  originally  fixed  it. 

A  new  or  amended  certificate  under  its  corporate  seal 
must  be  signed  and  acknowledged  by  the  president  and  two 
thirds  of  its  directors  or  trustees,  and  filed  in  the  office  of 
the  clerk  of  the  county  where  its  business  is  carried  on,  and 
in  the  office  of  the  secretary  of  state.1 

Same.— Business  Corporations.— Whenever  any  corpora 
tion  organized  under  the  Business  Act  has  fixed  the  dura- 
tion of  its  corporate  existence  for  a  less  period  than  fifty 
years,  it  may  at  any  time  extend  the  term  of  its  existence 
for  a  term  which,  with  the  term  originally  fixed,  will  not 
exceed  fifty  years. 

The  stockholders  owning  two  thirds  in  amount  of  the 
capital  stock  must  sign  a  certificate  either  in  person  or  by 
attorney  duly  authorized  and  acknowledged  or  proved,  so  as 
to  enable  it  to  be  recorded,  and  such  certificate  must  be  filed 
in  the  office  of  the  secretary  of  state  and  of  the  clerk  of 
the  county  in  which  the  principal  business  office  of  such 
corporation  is  situated.2 

Same.— Banks.— Any  bank  organized  under  the  laws  of 
this  state  may  extend  the  term  of  existence  beyond  the 
time  mentioned  in  the  certificate  of  incorporation,  by  the 
consent  of  the  stockholders  owning  two  thirds  i„  amount  of 
the  capital  stock,  by  a  certificate  signed  and  acknowledged 
by  such  stockholders,  and  filed  in  the  office  of  the  clerk  of 
the  county  in  which  the  original  certificate  of  incorporation 
was  filed,  and  a  copy  in  the  office  of  the  superintendent  of 
the  banking  department,  and  upon  filing  such   certificate,  its 

'  L7l  u{  T1857'  Chap-  29'  %2'as         '  Laws  of  l8?5-  chap.  6„,  q  2(> 
amended  by  Laws  of  1867,  chap.  12. 


52  THE    LAW    OF   CORPORATIONS. 

time  of  existence  will  be  extended,  as  designated  therein,  for 
a  period  not  exceeding  the  time  for  which  it  was  organized 
in  the  first  instance,  and  will  continue  to  enjoy  all  the  rights 
and  be  subject  to  all  the  liabilities  as  before  such  extension.1 

Same. —  Turnpike  and  Plank-Road  Companies. — Plank-road 
and  turnpike  companies  may  at  any  time  within  five  years  of 
the  expiration  of  their  corporate  existence  continue  their 
corporate  existence  for  a  period  not  exceeding  thirty  years, 
with  the  consent  of  a  majority  of  all  the  members  of  the 
board  of  supervisors  of  the  county  or  counties  in  which 
any  such  road  is  located,  together  with  the  consent,  in 
writing,  from  persons  owning  two  thirds  of  the  capital  stock 
of  such  company. 

This  does  not  apply  to  the  counties  of  Kings,  Queens, 
Yates,  Seneca  and  St.  Lawrence/ 

Extending  Term  of  Existence. —  Generally. — It  is  provided 
by  an  act  passed  May  ijtli,  1867,3  that  any  company  or  cor- 
poration previously  formed  under  any  general  law  of  this 
state  may  at  any  time  within  three  years  of  the  expiration 
of  its  term  of  existence  extend  such  term  beyond  the  time 
mentioned  in  the  original  articles  of  association  or  certificate 
of  incorporation. 

A  certificate  signed  by  the  stockholders  owning  two 
thirds  in  amount  of  the  capital  stock  of  such  company  must 
be  acknowledged  or  proved  so  as  to  enable  it  to  be  recorded  ; 
and  filed  in  the  office  of  the  secretary  of  state  and  in  the 
office  of  the  clerk  of  the  county  in  which  its  original  certifi- 
cate or  articles  of  association,  if  any,  are  filed  and  recorded  ; 
and  ^hereupon  the  time  of  existence  of  such  company  will 
be  extended,  as  designated  in  such  certificate,  for  a  term 
not  exceeding  the  term  for  which  it  was  organized  in  the 
first  instance. 


1  Laws  of  1SS9,  chap.  177.  amended  by  Laws  of  1870,  chap.  253. 

8  Laws    of  1876,    chapter  135,    as  3  Laws  of  1S67,  chap.  937. 


POWERS   AND    PRIVILEGES.  53 

The  Corporate  Seal. — The  seal  of  a  corporation  may  be 
made  by  an  impression  directly  on  the  paper.1 

If  a  corporation  have  no  formal  seal,  it  may  adopt  any 
seal  it  deems  proper,  and  the  seal  so  adopted  is  the  seal  of 
the  corporation/™  hac  vice.  Thus  the  adoption  of  the  seal 
set  opposite  the  name  of  one  of  the  officers  as  the  corporate 
seal  is  sufficient.2 

The  Right  to  Hold  Real  Estate. — A  corporation  organized 
under  the  laws  of  this  state  may  hold  such  property  either 
real  or  personal  within  the  state  as  may  be  necessary  for  the 
purposes  of  its  business,  not  exceeding  the  amount  limited 
in  its  charter  or  the  act  under  which  it  is  organized.3  The 
same  right  is  in  effect  extended  to  corporations  organized 
under  the  laws  of  any  other  state  of  the  United  States  by 
conferring  on  such  corporations  the  right  to  hold  and  convey 
such  real  estate  within  this  state  as  is  necessary  for  the  pur- 
poses of  their  business.4 

Many  of  the  acts  contain  restrictions  as  to  the  amount 
of  real  estate  that  corporations  may  hold  and  the  purposes 
for  which  it  can  be  purchased  and  held  ;  and  in  the  purchase 
of  real  estate  beyond  the  amount  actually  necessary  for  the 
purpose  of  the  business  of  such  company  these  acts  should 
be  consulted/ 

Lands  in  Other  States  or  Countries. — Any  corporation  organ- 
ized under  the  laws  of  this  state,  and  transacting  business  in 
it  and  other  states  or  foreign  countries,  except  savings-banks, 
may  acquire,  hold  and  convey  in  such  states  or  foreign 
countries,  with  the  consent  thereof,  such  real  estate  as  is 
requisite  for  such  corporation  in  the  convenient  transaction 
of  its  business.6 

1  Code  of  Civ.  Proc.  §  960.  *  Laws  of  1848,  chap.  40,  §  1  (App. 

2  South  Baptist  Soc.v.Ctapp.  iSB&rb.  A,  post)  ;  Laws  of  1875.    c'hap.  611, 
35  ;  Christie  v.  Gage,  2  T.  &  C.  344.  §  2  (App.  B,  post)  ;    and  the    special 

3  Rev.   Stat.,  part    1.  chap,  xviii.,  laws  given  in  Chap.  I.,  ante. 

title  3.  §  I-  6  Laws    of     1872.     chap.     146,    as 

4  Laws  of  1887,  chap.  450.  amended    by    Laws    of    1SS3,    chap. 


54 


THE    LAW    OF   CORPORATIONS. 


Adjacent  Lands. — Any  corporation  which  has  sold  or  con- 
veyed any  part  of  its  real  estate,  may,  notwithstanding  any 
restrictions  in  its  charter,  purchase,  take  and  hold  from  time 
to  time  any  lands  adjacent  to  those  already  held  by  it.  But 
it  is  provided  that  such  purchase  must  be  authorized  by  the 
supreme  court  upon  the  application  of  such  corporation, 
and  the  court  must  be  satisfied  that  the  value  of  all  the 
lands  proposed  to  be  purchased  does  not  exceed  that  of 
lands  sold  and  conveyed  by  it  within  three  years  preceding 
such  application.1 

'  The  Right  to  Hold  Stock  of  other  Companies. — Several  of  the 
acts  for  the  organization  of  corporations  contain  clauses  re- 
stricting such  companies  from  holding  stock  in  other  com- 
panies.2 

Manufacturing  Companies. — Corporations  organized  under 
the  Manufacturing  Act  are  authorized  to  hold  stock  in  the 
capital  of  any  corporation  engaged  in  the  business  of  mining, 
manufacturing  or  transporting  such  materials  as  are  re- 
quired in  the  prosecution  of  the  business  of  such  company 
so  long  as  they  continue  to  furnish  or  transport  such  mate- 
terials  for  the  use  of  such  company,  and  for  two  years  there- 
after, but  no  longer.     They  may  also  hold  stock  in  the  cap- 


361.  As  to  the  right  to  hold  stock 
in  other  corporations  conferred  by 
the  same  act,  see  post,  p.  56. 

1  Laws  of  1SS2,  chap.  290. 

2  Even  when  no  prohibition  is  ex- 
pressly imposed  a  corporation  has 
no  implied  right  to  subscribe  for  the 
stock  of  other  companies.  Thus  it 
was  held  in  The  Nassau  Bank  v. 
Jones,  95  N.  Y.  115,  that  a  banking 
corporation,  organized  under  the 
general  laws  of  this  state,  has  no 
power  to  subscribe  for  the  stock  of  a 
railroad  corporation. 

It  is  there  said  (p.  121)  that  "the 
language   employed  in    the  act   de- 


fines their  [the  banks']  powers  and 
duties,  and  excludes  by  necessary 
implication  a  capacity  to  carry  on 
any  other  business  than  that  of 
banking,  and  the  adoption  of  any 
other  methods  for  the  prosecution 
of  such  business  than  those  speci- 
fically pointed  out  by  the  statute." 

The  same  rule  would  doubtless 
apply  in  the  case  of  any  cor- 
poration becoming  a  subscriber  to 
the  stock  of  other  corporations,  but 
a  distinction  might  possibly  be  made 
between  a  subscription  to  stock  and 
an  investment  in  stock  already  is- 
sued. 


POWERS   AND    PRIVILEGES.  55 

ital  of  any  corporation  which  uses  or  manufactures  materials 
mined  or  produced  by  them.1 

Except  as  expressly  authorized,  companies  organized 
under  the  above  act  are  not  permitted  to  use  any  of  their 
funds  in  the  purchase  of  any  stock  in  any  other  corpora- 
tion.* 

Insurance  and  Guarantee  Companies. — With  the  exception  of 
life  insurance  companies,  insurance  and  guarantee  com- 
panies are  generally  permitted  to  invest  their  surplus  in  the 
stock  of  other  solvent,  dividend-paying  companies  organized 
under  the  laws  of  this  state  or  of  the  United  States.  They 
are  not,  however,  permitted  to  purchase  their  own  stock.3 

Railroads. — Railroad  companies  organized  under  chapter 
one  hundred  and  forty  of  Laws  of  1850  are  prohibited  from 
using  any  of  their  funds  in  the  purchase  of  any  stock  in 
their  own  or  any  other  corporation;4  but  by  subsequent 
legislation,  any  railroad  corporation  organized  under  the  laws 
of  this, or  of  any  adjoining  state,  is  authorized  to  subscribe  for, 
take  and  hold  the  stock  of  union  railway  depot  companies.5 

Corporations  organized  for  the  purpose  of  building  and 
operating  railroads  in  foreign  countries  are  prohibited  from 
using  their  funds  in  the  purchase  of  any  stock  in  their  own 
or  any  other  corporation,  except  so  far  as  the  same  may  be 
agreed  upon  in  their  articles  of  association.6 

Pipe-Line  Companies — Any  company  organized  for  the 
purpose  of  constructing  pipe  lines,  etc,  is  prohibited  from 
using   any  of  its  funds  in   the  purchase  of  any  stock   in  its 

1  Laws  of  1866,  chap.  S3S,  §  3,  as  of  1853,  chap.  466,  §  8,  as  amended 
amended  by  Laws  of  1S76,  chap.  by  Laws  of  1S71,  chap.  6oS,  s;  1. 
35S.  Also   Laws  of   1S53,  chap.  463,  £  8, 

2  Laws  of  1S4S,  chap.  40,  §  8.  as  amended  by  Laws  of  1S6S,  chap. 

3  As  to  what  the  capital  and  sur-  318,  §  1,  as  modified  by  Laws  of 
plus  of  such  companies  may  be  in-  1865,  chap.  32S,  §  2  ;  also  Laws  of 
vested  in  consult  the  acts  under  1 S 7 5 .  chap.  423,  §  2,  as  amended  by 
which  the  company   is  organized  as  Laws  of  1SS6,  chap.  394. 

given  in  Chap  L,  ante;  Laws  of  1S49,  4  Laws  of  1S50,  chap.  140.  i  B. 

chap.  30S,  §  S,  as  amended  by  Laws  5  Laws  of  1SS2,  chap.  273,  i  2. 

of  1S57,  chap.  469,  §  1.     Also  Laws  6  Laws  of  iSSi,  chap.  46S,  §  12. 


56  THE    LAW    OF   CORPORATIONS. 

own  or  any  other  corporation,  or  from  in  any  manner  be- 
coming liable  for  the  debt  or  miscarriage  of  any  person  or 
corporation.1 

Stock  of  Foreign  Corporations. — The  laws  heretofore  given 
are  modified  by  a  law  passed  in  1872,  and  amended  in  1883, 
which  provides  that  any  corporation,  except  a  savings- 
bank,  organized  under  the  laws  of  this  state,  and  transacting 
business  in  it  and  other  states  or  foreign  countries,  may  "  in- 
vest its  funds  in  the  stocks,  bonds  or  securities  of  other 
corporations  owning  lands  situated  in  this  state  or  such 
states,  provided  that  loans  shall  not  be  made  on  any  stocks 
upon  which  dividends  shall  not  have  been  declared  con- 
tinuously for  three  years  immediately  before  such  loans 
are  made  ;  and  provided  further  that  such  stocks  shall  be 
continuously  of  a  market  value  twenty  per  cent,  greater 
than  the  amount  loaned  or  continued  thereon."2 

This  act,  as  originally  passed  in  1872,  authorized  any 
corporation  organized  under  the  laws  of  this  state,  and 
transacting  business  in  several  states,  to  hold  real  estate  in 
such  states.3  The  amendment  of  1875  extended  it  to  cor- 
porations doing  business  in  foreign  countries,  as  well  as 
other  states,  and  authorized  them  also  to  hold  stock  in  other 
corporations,  provided  such  stock  was  based  upon  or  repre- 
sented real  estate  required  in  its  business.  The  amendment 
of  1883  extended  it  still  further,  as  above  stated,  but  ex- 
cepted savings-banks  from  its  provisions.  Originally  in- 
tended to  enable  corporations  to  invest  in  real  estate  in 
other  states  and  foreign  countries,  this  act  has  by  successive 
amendments  assumed  a  much  broader  scope,  but  whether 
as  broad  as  the  language  of  the  act,  aside  from  its  history, 
would  indicate,  cannot  in  the  absence  of  judicial  construc- 
tion safely  be  assumed. 

The  Right  to  Appoint  Officers. — Corporations  have  the  right  to 

1  Laws  of  1S7S,  chap.  203.  §  9.  ed  by  Laws  of   1SS3,  chap.  361,  §  I. 

2  Laws  of  1S72, chap. 146, as  amend-  3  See  a>itt\  p.  53. 


POWERS    AND    l'UIYILEGES. 


57 


appoint  such  subordinate  officers  and  agents  as  the  business 
of  the  corporation  ma)'  require,  and  to  allow  them  a  suitable 
compensation.1 

A  corporation  must  necessarily  transact  its  business 
through  officers,  and  should  have  at  least  a  president, 
secretary  and  treasurer.  Most  of  the  acts  for  the  organiza- 
tion of  corporations  provide  for  the  election  of  a  president 
from  the  board  of  directors  or  trustees.2  The  Business 
Act  provides  that  all  the  officers  of  the  company  prescribed 
by  the  by-laws  shall  be  elected  from  the  board  of  directors, 
and  that  there  must  be  a  president,  secretary  and  treasurer.3 

The  act  for  the  incorporation  of  Title  Guarantee  Com- 
panies contains  the  same  provision  as  to  officers,  and  in  ad- 
dition to  the  officers  above  named  requires  the  election  of  a 
General  Manager.4 

By-Laws. — A  corporation  has  the  right  to  make  by-laws. 
not  inconsistent  with  any  existing  laws,  for  the  management 
of  its  property,  the  regulation  of  its  affairs,  and  for  the 
transfer  of  its  stock.5 

Such  by-laws  must  be  reasonable  and  consistent  with  the 
general  principles  of  law,  and,  while  they  may  regulate  and 
modify  the  constitution  of  the  corporation,  they  cannot 
alter  it,  and  all  amendments  must  be  equally  in  accord  with 
such  principles.6 

Unless  expressly  authorized  by  its  charter,  or  by  the  act 


1  See  ante,  p.  49. 

2  See  the  several  acts  for  the  incor- 
poration of  the  following  corpora- 
tions, as  given  in  Chapter  I.,  ante, 
which  provide  that  a  president  shall 
be  elected  :  Building  associations, 
ferry  companies,  gas-light  compa- 
nies, guano  companies,  hotel  compa- 
nies, manufacturing  corporations, 
pipe-line  companies,  railroad-supply 
companies,  stage-coach  companies. 

3  Laws  of    1S75,  chap.   611,  §   10, 


as  amended   by  Laws  of  1S90,  chap. 
23. 

4  Laws  of  1SS5,  chap.  53S,  i  6. 

5  See  ante,  p.  49.  As  to  the  effect  of 
by-laws,  and  as  to  who  is  presum- 
ed to  have  notice  of  them  under  the 
decisions  in  this  State,  see  Chap. 
VIII. 

6  Kent  v.  Quicksilver  Mining  Co., 
7S  N.  Y.  159  ;  Driscoll  v.  West  Brad- 
ley, etc.,  M.  Co.,  59  N.  Y.  96. 


58  THE   LAW    OF   CORPORATIONS. 

under  which  it  is  organized,  a  corporation  has  no  power  to 
enact  a  by-law  creating  a  lien  on  its  shares.1 

Who  Authorized  to  Make  By-Laws. — The  directors  or  trustees 
of  the  following  corporations  are  empowered  by  the  acts 
under  which  they  are  organized  to  make  necessary  by-laws.2 

Manufacturing  corporations,  insurance  and  guarantee 
companies,  safe  deposit  companies,  trust  companies,  railroad 
construction  companies,  building  and  apartment-house  com- 
panies, ferry  companies,  gas  light  companies,  guano  compa- 
nies, hotel  companies,  and  navigation  companies. 

'  The  act  for  the  incorporation  of  business  corporations 
provides  that  when  one  half  of  the  capital  has  been  sub- 
scribed the  subscribers  shall  adopt  by-laws.3  But  whether 
adopted  by  the  stockholders  or  directors  they  must  be 
adopted  at  a  meeting  held  within  the   state.4 

What  the  By-Laws  Must  Provide. — There  is  generally  no  pro- 
vision as  to  what  shall  be  contained  in  the  by-laws.  Under 
the  Business  Act,  however,  the  subscribers,  when  one-half  of 
the  capital  has  been  subscribed,  must  meet  and  adopt  by- 
laws, which  shall  provide  : 

1.  The  number  of  directors  of  the  corporation. 

2.  The  term  of  office  of  such  directors,  which  shall  not 
exceed  one  year. 

3.  The  manner  of  filling  vacancies  among  directors  and 
officers. 

4.  The  time  and  place  of  the  annual  meeting. 

5.  The  manner  of  calling  and  holding  special  meetings 
of  the  stockholders. 

6.  The  number  of  stockholders  who  shall  attend  either 
in  person  or  by  proxy  at  every  meeting,  in  order  to  con- 
stitute a  quorum. 

1  Driscoll  v.  West  Bradley,  etc.,  M.  that  power  remains  in  the  sharehold- 
er., 59  N.  Y.  96.  ers.     Taylor  on  Corporations,  §  582. 

*  See  the  acts  under  which  they  are  ''  Laws  of  1S75.  chap.  611.  §  5. 

organized   as  given  in  Chap.  \.,ante.  4  Ormsby  v.   Vermont  Copper  Min- 

When  the  directors  are  not  empow-  ing  Co.,  56  N.  Y.  623. 
ered  by  the  charter  to  make  by-laws 


POWERS   AND   PRIVILEGE^.  59 

7.  The  officers  of  the  corporation,  the  manner  of  their 
election  by  and  among  the  directors,  and  their  powers  and 
duties.  But  such  officers  shall  always  include  a  president, 
a  secretary  and  a  treasurer. 

8.  The  manner  of  electing  or  appointing  inspectors  of 
election. 

9.  The  manner  of  amending  the  by-laws.1 

The  act  for  the  incorporation  of  title  guarantee  compa- 
nies provides  that  when  one  third  of  the  capital  has  been 
subscribed,  a  meeting  of  the  subscribers  shall  be  called  for 
the  purpose  of  electing  directors  and  adopting  by-laws, 
and  there  is  the  same  provision  as  to  what  the  by-laws  shall 
contain  as  in  the  Business  Act,  except  that  in  the  former  the 
officers  must  include  a  general  manager  as  well  as  a  presi- 
dent, secretary  and  treasurer.2 

By-Laws— How  Amended. — No  rules  for  the  modification  or 
amendment  of  by-laws  are  prescribed  by  the  several  acts ; 
and,  since  amending  a  by-law  is  but  substituting  a  new  by- 
law in  place  of  an  old  one,  it  follows  that  the  same  body 
that  has  power  to  make  by-laws  has  power  to  amend  them.3 

The  Business  Act  provides  that  no  amendment  to  the 
by-laws  of  corporations  organized  under  it  shall  take  effect 
until  a  copy  of  such  amended  by-law  has  been  filed  in  the 
office  of  the  secretary  of  state,  and  in  the  office  of  the 
clerk  of  the  county  where  its  principal  business  office  is 
located. 

Title  guarantee  companies,  in  case  of  the  amendment  of 
any  by-law,  are  required  to  file  a  copy  of  such  amended  by- 
law, duly  certified  under  the  seal  of  the  corporation,  with 
the  superintendent  of  the  insurance  department,  and  with 
the  clerk  of  the  county  where  its  principal  place  of  business 
is  located,  and  no  amendment  to  a  by-law  can  take  effect 
until  so  filed.5 

1  Laws  of  1S75,  chap.  6u,  §6.  7S  N.  Y.  159. 

2  Laws  of  1SS5.  chap.  538,  §6.  4  Laws  of  1S75,  chap.  6ri,  §  7. 
zA~ent  v.    Quicksilver  Mining    Co.,  5  Laws  of  i8S5,  chap.  53S,  £  7. 


6o  THE    LAW    OF   CORPORATIONS. 

Certain  By-Laws  to  be  Published. — No  by-law,  made  by  the 
directors  or  managers  of  a  corporation,  regulating  the  elec- 
tion of  directors  or  officers,  is  valid  unless  it  shall  have  been 
published  for  at  least  two  weeks  in  some  newspaper  in  the 
county  at  least  thirty  days  before  such  election.1 

No  by-law  of  any  moneyed  corporation 2  regulating 
the  election  of  its  directors,  whether  made  by  the  directors 
or  stockholders,  is  valid  unless  made  at  least  sixty  days  be- 
fore the  day  appointed  for  the  election,  and  unless  it  is  pub- 
lished for  at  least  two  weeks  in  succession,  immediately 
following  its  enactment,  in  some  newspaper  in  the  city  or 
county  where   the  corporation  is  situated.5 

Any  by-law  designating  the  time  and  place  of  an  election 
comes  within  the  provisions  of  these  statutes.4 

Article  II. 
Incidental  Powers  and  Privileges. 

In  addition  to  the  powers  above  enumerated,  and  to 
those  expressly  given  in  its  charter,  or  in  the  act  under  which 
it  is  incorporated,  a  corporation  possesses  no  powers,  except 
such  as  are  necessary  to  the  exercise  of  the  powers  so  given 
or  enumerated. b 

This  statute  is  not  intended  to  establish  any  rule  incon- 
sistant  with  the  presumption  that  a  corporation  may,  within 
the  reasonable  scope  of  its  business,  make  every  contract 
that  a  natural  person  could  make.6  Unless  restrained  by 
law,  it  may  make  any  contract  necessary  to  advance  the  ob- 
jects   for   which    it   was   created.'      It    may  borrow    money 

1  Revised    Statutes,  parti  .,    chap.  *  Matter  of Long  Island.    R.  A'.,  19 

xviii.,  title  4,  §  6.  Wend.  37. 

•  Moneyed  corporations  are  defin-  s  Revised    Statutes,    part  I.,  chap. 

ed  as   corporations    having  banking  xviii.,  title  3,  §  3  ;  ante,  p.  50. 

powers  or  having  the  power  to  make  «  Feiny  v.  People's    Fire    Ins.   Co., 

loans  upon  pledges  or    deposits,  or  N.  Y.  Super.  (2  Robt.)  599. 

authorized  by    law    to   make    insur-  1  Legrand  v.  Manhattan  Mercantile 

ances.  Assn.,  80  N.  Y.  63S. 

3  Laws,  1882,  chap.  409,  §  207. 


POWERS   AND    PRIVILEGES.  6l 

necessary  for  its  business1  and,  unless  expressly  prohibited, 
may  mortgage  its  property  to  secure  the  same ;  but,  in  the 
absence  of  some  statute  allowing  it,  it  cannot  mortgage  its 
franchises.2 

Even  where  the  statute  did  expressly  prohibit  corpora- 
tions organized  under  it  from  mortgaging  or  creating  any 
lien  upon  their  property,  it  was  held  that  a  purchase-money 
mortgage  given  by  such  a  corporation  (one  organized  under 
the  Manufacturing  Act  before  it  was  amended) 3  was  a  valid 
lien  upon  the  property  until  the  purchase  price  was  paid,  as 
against  any  one  but  bona  fide  purchasers.4 

As  pertaining  to  the  incidental  powers  of  corporations, 
organized  under  the  laws  of  this  state,  it  has  been  held  that 
a  company,  organized  for  the  purpose  of  raising  and  smelt- 
ing ore,  had  the  power  to  purchase  smelting  works  and  all 
the  appurtenances,  and  that  even  though  the  property  in- 
cluded some  foreign  to  the  purposes  required  for  the  busi- 
ness, yet  if  made  in  good  faith  the  purchase  would  not  be 
void.5 


SPECIAL    PROVISIONS    REGULATING   MORTGAGES. 

Manufacturing  Corporations. — Corporations  organized  under 
the  manufacturing  acts  as  originally  passed,  were  prohibited 
from  mortgaging  or  creating  a  lien  upon  any  of  their  prop- 
erty," but  in  1864  an  act  was  passed  enabling  corporations 
organized  under  that  act,  or  any  acts  amending  or  extending 
the  same,  to  mortgage  their  real  estate,  providing  that  the 
written  assent  of  the  stockholders  owning  at  least  two  thirds 
of  the  capital  stock  should  first  be  filed  in  the  office  of  the 
clerk    of    the  county   where    the   mortgaged    property   was 

1  Curtiss  v.   Leavitt,    15     N.  Y.    9;  3  Laws  of  134S,  chap.  40,  §  2. 

Kent  v.  Quicksilver   Mining  Co.,  7S  4  Coman  v.  Lakey,  So  N.  V.  345. 

N.  Y.  159.  5  Moss  v.  Averell,  10  N.  Y.  449. 

5  Carpenter   v.    Black   Hawk    Gold  6  Laws  of  1848,  chap.  40,  §  2. 
Mining  Co.,  65  N.  Y.  143. 


62  THE    LAW   OF   CORPORATIONS. 

situated.1     This  power  was  extended  in  1871  to  personal,  as 
well  as  real  estate.2 

In  1878  an  act  was  passed  to  enable  any  such  corpora- 
tions to  secure  a  debt  "by  mortgaging  all  or  any  part  of  the 
goods  and  chattels  of  such  corporation,  and  also  the  fran- 
chises, privileges,  rights  and  liberties  thereof."  But  in  order 
to  do  this  the  written  assent  of  a  majority  of  the  stock- 
holders owning  at  least  two-thirds  of  the  capital  stock  must 
be  filed  in  the  office  of  the  clerk  of  the  county  where  the 
corporation  has  its  principal  place  of  business,  and  also  in 
'the  office  of  the  clerk  of  the  county  where  such  goods  and 
chattels  are  situated.3 

This  amendment  was  not  intended  to  supersede  the 
amendments  of  1864  and  1871  and  does  not  take  away  the 
previously  existing  power  of  the  owners  of  two  thirds  of  the 
stock  to  authorize  the  mortgaging  of  the  real  and  personal 
property  of  the  corporation,  but  only  gives  power  to  add  to 
a  chattel  mortgage  a  mortgage  upon  the  corporate  franchises; 
but  such  franchises,  privileges,  rights  and  liberties  must  be 
speciallymentioned  in  the  assent  signed  by  the  stockholders, 
or  the  mortgage  will  be  inoperative  as  to  them  while  still  a 
lien  upon  the  property." 

These  amendments  effectually  relieve  such  corporations 
from  the  restriction  upon  their  corporate  capacity  to  give 
any  lien  upon  their  property,  by  mortgage  or  otherwise,  im- 
posed by  the  second  section  of  the  original  act.  As  is  said 
by  Rapallo,  J.,  in  the  case  of  Lord  v.  Yonkers  Fuel  Gas  Co. 
{supra):  "  It  is  evident  that  such  restriction  is  intended  only 
to  limit  the  general  powers  of  trustees  of  such  corporations, 
and  subject  them  to  the  control  of  the  stockholders  in  the 
matter  of  living  mortgages  or  liens,  and  was  not  founded  on 
any  supposed  policy  of  withholding  from  that  particular 
class  of  corporations,  the  full  control  of  their  property,  and 

1  Laws  of  1S64,  chap.  517,  §  2.  4  Lord  v.  Yonkers  Fuel  Gas  Co.,  99 

2  Laws  of  1871,  chap.  481,  §  1.  N.  Y.  547. 

3  Laws  of  1S7S,  chap.  163.  §  1. 


POWERS   AND    PRIVILEGES.  63 

the  corporate  power  of  disposing  of  or  incumbering  it  which 
is  possessed  by  corporations  in  general.  With  the  prescribed 
consent  of  the  stockholders,  they  arc  declared  to  be  as  com- 
etent  as  natural  persons  to  secure  the  payment  of  their 
legitimate  debts  by  mortgage  upon  their  real  or  personal 
property." 

It  will  be  noticed  that,  with  the  exception  of  the  power 
to  mortgage  real  property,  which  should  be  named,  a  com- 
pliance with  the  last  amendment  is  broad  enough  to  cover 
both. 

Business  Corporations. — Corporations  organized  under  the 
Business  Act  are  authorized  to  borrow  money  for  the  legiti- 
mate purposes  of  their  business,  and  for  that  purpose  to 
issue  bonds  with  or  without  coupons  attached,  or  to  mort- 
gage any  portion  of  their  real  estate.  Such  bonds  or 
mortgages  cannot  bear  interest  at  a  rate  exceeding  six  per 
cent.,  and  the  amount  outstanding  must  at  no  time  exceed 
one  half  of  the  value  of  the  corporate  property.  The  written 
assent  of  stockholders,  owning  more  than  two  thirds  of  the 
stock,  must  first  be  obtained.  Any  issue  in  excess  of  the 
amount  above  specified  renders  any  director  voting  for  the 
same  personally  liable  to  the  holders  of  such  bonds  or  mort- 
gages for  any  damages  caused  by  such  over-issue.1 

There  is  no  provision  for  a  mortgage  of  the  franchises  of 
such  corporations,  and,  as  we  have  seen,2  without  such  a 
provision  none  can  be  made. 

No  bonds  can  be  issued  by  such  a  company,  except  for 
money,  labor  done  or  property  actually  received  for  the  use 
and  legitimate  purpose  of  such  corporation  at  its  fair  value. 
and  all  fictitious  increase  of  indebtedness,  in  any  form,  is 
void.3 

Building  Companies. — Any  company  organized  under  chapter 
one  hundred  and  seventeen  of  Laws  of    1853,  or  its  amend- 

1  Laws  of  1875,  chap.  611,  §  13,  as  "■  Ante,  p.  61. 

amended    by    Laws    of   iSSS,    chap.  3  Laws  of  1875,  chap.  611,  §  14. 

394- 


64  THE   LAW   OF   CORPORATIONS. 

ments,1  may  secure  the  payment  of  any  debt  contracted  in 
the  purchase  of  property  for  the  business  for  which  it  was 
incorporated  or  to  develop  property  already  purchased,  by 
mortgaging,  and  issuing  mortgage-bonds  on  any  part  of  its 
real  estate,  goods  and  chattels,  and  on  its  franchises,  privi- 
leges, rights  and  liberties,  provided  that  the  written  assent 
of  a  majority  of  its  stockholders,  owning  at  least  two-thirds 
of  its  capital  stock,  be  first  filed  in  the  office  of  the  clerk  of 
the  county  where  the  corporation  has  its  principal  place  of 
business,  and  also  in  the  office  of  the  clerk  of  the  county 
where  such  real  estate,  goods  and  chattels  are  situated.2 

Gas-Light  Companies. — These  companies  may  borrow  money 
necessary  for  their  business,  to  an  amount  not  exceeding  one- 
half  of  their  capital  stock,  and  may  issue  bonds  for  any 
amount  so  borrowed,  and  mortgage  the  corporate  property 
and  franchises  to  secure  the  payment  of  any  debt  so  con- 
tracted.3 

Railroads. — Railroad  companies  are  authorized  to  borrow 
money  for  completing  or  operating  their  road,  and  to  issue 
bonds  for  any  amount  so  borrowed,  and  to  mortgage  their 
corporate  property  and  franchises  to  secure  the  payment  of 
any  debt  contracted  for  such  a  purpose.4  Such  a  mortgage 
upon  real  and  personal  property  need  not  be  filed  as  a 
chattel  mortgage,  if  recorded  as  a  mortgage  of  real  estate  in 
each  county  in  or  through  which  the  railroad  runs.5 

The  rolling-stock  of  a  railroad  is  not  real  estate,  and  un- 
less   this  requirement   is  complied   with   a   mortgage  upon 
rolling-stock  must  be  filed  as  an  ordinary  chattel  mortgage.6 
Stage-Coach  Companies — Companies  organized  under  chap- 
ter nine  hundred  and  seventy-four  of  the  laws  of  1867  for  the 

1  gee  ante,  p.  36.  subdv.  10,   as   amended   by  Laws  of 

8  Laws    of    1S80,    chap.     1S2,    as  1SS7.  chap.  724. 

amended  by  Laws  of  iSSg,  chap.  57.  5  Laws  of  186S,  chap.  779. 

3  Laws  of    1S4S,  chap.  37,  §   2,  as  6  Hoyle  v.  Pittsburgh  &*  Montreal 
amended  by  Laws  of  1S72,  chap.  374-  R-  R-  Co.,  54  N.  Y.  314. 

4  Laws  of    1S50,   chap.    140,  §  28, 


POWERS   AND    PRIVILEGES. 


65 


purpose  of  establishing  and  operating  stage  or  omnibus 
routes  may  borrow  money  for  the  purpose  of  equipping  and 
operating  their  lines,  and  may  issue  bonds  for  any  amount 
so  borrowed,  and  may  mortgage  their  corporate  property 
and  franchises  to  secure  the  same. 

To  Secure  Future  Advances. — After  some  vacillation  ill  the 
State  courts,  it  has  been  finally  decided  in  the  Supreme 
Court  of  the  United  States,  that  a  mortgage  to  secure 
future  advances  is  valid  unless  prohibited  by  statute;5 
and  it  seems  now  to  be  well  settled  in  this  state  that  a 
corporation  may  secure  the  payment  of  its  negotiable 
bonds,  to  be  thereafter  issued,  even  though  the  debts 
authorized  to  be  secured  were  not  in  existence  at  the  time 
of  the  execution  of  the  bonds  and  mortgage.  If  the 
bonds  are  negotiated  only  for  the  purpose  of  securing  or 
paying  debts  contracted  before  the  negotiation,  the  secur- 
ity to  the  creditors  then  for  the  first  time  comes  into  being 
and  is  as  effectual  as  if  the  mortgage  were  executed  at  the 
same  time  with  the  delivery  of  the  bonds.3 

Renewals  of  notes  are  protected  by  a  mortgage  executed 
as  a  collateral  and  continuing  security  for  the  payment 
which  then  had  been  or  should  thereafter  be  made.4 

A  mortgage  may  cover  the  future  as  well  as  present 
estate  of  a  company  ; a  and  it  may  be  given  to  trustees  to 
secure  bonds  issued.6 

The  Assent  of  the  stockholders. — Where  the  statute  requires 


1  Laws  of  1S67,  chap.  974,  §  13, 
subdv.  4. 

■Jones  v.  /V.  Y.  Guaranty  6°  In- 
demnity  Co.,  101  U.  S.  622. 

3  Lord  v.  Yon  hers  Fuel  Gas  Co.,  99 
N.  Y.  547  ;  Martin  v.  Niagara  Falls 
Paper  Mfg.  Co..  44  Hun,  130;  Jones 
v.  N.  Y.  Guaranty  ^  Indemnity  Co., 
IOI  U.  S.  622.  In  Carpenter  v.  Blaek 
Hawk  Gold  Mining  Co.  (65  N.  Y.  43), 
it  is  said  (obiter)  that  "a  mortgage 
upon  real  estate  is  allowed  only  to 
secure    the    payment    of    debts.     It 


cannot  be  made  to  raise  money 
merely  to  carry  on  the  operations  of 
the  company;"  but  this  expression 
was  not  concurred  in  by  the  other 
members  of  the  commission,  and  is 
overruled  by  the  cases  above  cited. 

4  Martin  v.  Niagara  Falls  Paper 
Mfg.  Co.,  44  Hun,  130. 

5  Fisk  v.  Potter,  2  Abb.  Ct.  App. 
Dec.  138.  Carpenter  v.  Black  Hawk 
Gold  Mining  Co.,  65  N.  Y.  43. 

6  See  cases  cited  in  note  3  (supra). 


66  THE    LAW    OF   CORPORATIONS. 

that  the  assent  of  the  stockholders  be  obtained  before  a 
mortgage  is  executed,  such  assent  is  an  indispensable  con- 
dition to  a  valid  mortgage.1  The  assent  of  the  corporation 
itself  is  not  a  compliance  with  the  statute.  It  must  be  the 
individual  act  of  the  stockholders.2 

Whether,  in  the  very  common  case  of    stock  remaining 
in  the  treasury  of  the  company  after  it  is  issued,  it  is  neces- 
sary to  have  the  assent  of  stockholders  owning  two-thirds  of 
the  whole  amount  issued  has  not  been  decided — the  ques- 
tion, in   the  case  of    Vail  v.  Hamilton  {supra),  having    been 
raised,  but,  as  not  necessary  to  the  decision  of  the  case,  not 
having  been  passed  upon.     Where  the  assent  of  two-thirds 
of  the  whole  can  be  obtained,  it  is  perhaps  safer  to  obtain 
it,  but    in    the   case    of    the    Greenpoint  Sugar  Company  v. 
Whitin, 3  it  was  held    that  stock    not    issued   could  be    de- 
ducted in  estimating  the  amount  necessary  to  constitute  two- 
thirds,  as  otherwise  it  might  happen  that  there  would  not 
be  a  sufficient  ownership  of  stock  to  enable  the  company  to 
execute  a  mortgage  at  all,  and  the  same  reasoning  would 
apply  in  the  case  of  the  ownership  of  stock  by  the  company. 
In  the  same  case  it  is  said  that  the  purpose  and  intent  of 
the  requirement  is  to  protect  stockholders  from  improvident 
or  corrupt  acts  of  the  officers,  and  that  its  general  purpose 
and  design  was  in  the  interests  of  the  stockholders  only.     It 
was  accordingly  held  that  an  assent  to  the  issue  of  a  bond 
secured    by    mortgage,     not    specifying    any    amount,    nor 
describing  the  property  covered  by  the  mortgage,  and  filed 
with  the  mortgage,  was  sufficient.     Where  a  mortgage  has 
been  executed  without  the   required   assent   of   the    stock- 
holders, it  is  validated  by  a  subsequent  assent  if  there  are 
no  intervening  rights,  and  from  that  time  it  becomes  a  valid 
mortgage.4 

1  Vail  v,  Hamilton,  85  N.  Y.  453;  s  6q  N.  Y.  328. 

Rochester   Savings    Bank  v.   Averell,  4  Rochester  Savings  Bank  v.  Averell, 

96  id.  467.  96  N.  Y.  467. 

8  Vail  v.  Hamilton  (supra). 


POWERS   AND    PRIVILEGES.  67 

Filing  Assent  where  Real  Estate  is  out  of  the  State. — Where 
a  corporation  makes  a  mortgage  of  any  of  its  real  estate  situ- 
ated beyond  the  limits  of  this  state,  and  the  recording  office 
of  the  county  in  which  it  is  situated  refuses  to  file  or  record 
the  assent,  it  may  be  filed  in  the  office  of  the  clerk  of  the 
county  where  the  company  has  its  principal  place  of  busi- 
ness within  the  state.1 

Failure  to  file  Assent. — By  a  law  passed  April  i,  1875,2  it 
was  provided  that  in  cases  where  a  corporation  had  before 
that  time  executed  a  mortgage  of  any  of  its  real  estate,  and 
the  requisite  assent  of  the  stockholders  had  been  given  at  or 
before  the  time  of  the  giving  of  the  mortgage,  but  had  not 
been  filed  in  the  office  of  the  clerk  of  the  county  where  the 
real  estate  was  situated,  the  consent,  accompanied  by  an 
affidavit  of  an  officer  or  stockholder  that  it  was  made  and 
signed  at  the  time  it  purported  to  have  been  made,  might 
be  filed,  and  the  mortgage  would  then  have  the  same  validity 
and  effect,  from  the  time  of  filing  such  assent,  as  if  it  had 
been  filed  with,  or  had  preceded  the  filing  of  the  mortgage, 
except  that  no  intervening  rights  either  by  action,  lien  or 
otherwise,  should  be  affected  by  such  a  mortgage.  This 
statute  is  construed  as  in  entire  conformity  with  the  more 
general  principle  that  where  a  mortgage  has  been  executed 
without  the  requisite  assent,  the  defect  is  cured  by  a  subse- 
quent assent  if  there  are  no  intervening  rights,  and  from  the 
time  of  such  assent  it  becomes  a  valid  mortgage.3 

The  filing  of  the  assent  is  not  an  indispensable  condition 
to  the  validity  of  the  mortgage  as  against  a  subsequent 
mortgagee  or  purchaser  with  notice,  and  if  essential  to  com- 
plete the  rights  of  the  mortgagee,  it  may  be  filed  as  of  the 
time  the  assent  was  given.4 


1  Laws  of  1S69,  chap.  706.  s  Rochester  Savings  Bank  v.  Averell, 

2  Laws  of  1875,  chap.  SS.  96  N.  Y.,  467. 

4  Ibid. 


68  THE   LAW    OF   CORPORATIONS. 

•   Article  III. 

Special  Powers  and  Privileges. 

In  addition  to  the  general  powers  enumerated  in  the 
first  article  of  this  chapter,  and  the  incidental  powers  re- 
ferred to  in  Article  II.,  there  are  certain  special  powers 
conferred  by  statute  upon  corporations  which  are  not 
among  those  enumerated,  nor  are  they  such  as  incidentally 
flow  from  the  powers  granted  to  all  corporations. 

CONSOLIDATION   OF   CORPORATIONS. 

Manufacturing  Corporations.— Corporations  organized  under 
any  general  or  special  law  for  the  purpose  of  carrying  on 
any  kind  of  manufacturing  business  of  the  same  or  similar 
nature,  may  be  consolidated  into  a  single  corporation. 

The  directors  of  companies  desiring  to  consolidate  must 
enter  into  an  agreement  under  their    respective  corporate 
seals  for  the    consolidation  of    such  companies,  prescribing 
the    terms    and   conditions    of    consolidation,  the   mode   of 
carrying  it  into  effect,  the  name  of  the  new  corporation,  the 
number  of  trustees  (not  less  than  three  nor  more  than  thir- 
teen), the  names  of  the  trustees  who  shall  manage  the  con- 
cerns  of  the   company  for  the   first   year  and   until  others 
shall  be  elected  in  their  places,  the  term  of  existence  of  such 
new  company  (not  exceeding  fifty  years),  the  name  of  the 
town  or  towns,  county  or  counties  in  which  the  operations 
of  the  new  company  are  to  be  carried  on,  and  if  any  of  the 
consolidated  companies  were  organized  for  the  purpose  of 
carrying  on  any  part  of  their  business  in  any  place  out  of 
this  state,  and  the  new  company  proposes  to  do  the  same, 
the  agreement  must  so  state,  and  must  also  state  the  name 
of  the  town  or  city  and  county  in  which  the  principal  part 


POWERS  AND   PRIVILEGES.  69 

of  the  business  of  the  new  company  within  the  state  is  to 
be  transacted,  the  amount  of  capital,  the  number  of  shares  of 
stock  into  which  the  same  is  to  be  divided,  and  the  manner 
of  distributing  such  capital  among  the  consolidated  corpora- 
tions or  their  stockholders,  and  such  other  particulars  as 
may  be  necessary. 

The  capital  cannot  be  larger  in  amount  than  the  fair 
aggregate  value  of  the  property,  franchises  and  rights  of 
the  several  consolidated  corporations,  but  it  maybe  increased 
in  the  same  manner  as  that  of  manufacturing  corporations.' 

The  agreement  so  made  must  be  submitted  to  the  stock- 
holders of  the  respective  corporations  at  meetings  specially 
called  for  that  purpose,  upon  notice  specifying  the  time  and 
place  of  such  meeting  and  its  object,  addressed  and  mailed 
to  each  of  the  stockholders  where  their  address  is  known,  at 
least  thirty  days  before  such  meeting,  and  published  for  at 
least  three  successive  weeks  in  a  newspaper  published  in 
each  of  the  counties  of  this  state  in  which  any  of  the  cor- 
porations to  be  consolidated  has  its  place  of  business. 

At  such  meetings  each  share  of  capital  stock  present 
either  in  person  or  by  proxy  is  entitled  to  one  vote,  and 
when  sanctioned  by  two-thirds  in  amount  of  the  stock  so 
represented,  in  a  vote  taken  by  ballot  at  each  of  the  meet- 
ings, the  agreement  of  the  directors  is  deemed  to  be  the 
agreement  of  the  several  corporations,  and  a  verified  copy 
of  the  proceedings  of  such  meetings  made  by  the  respective 
secretaries,  and  attached  to  the  agreement,  is  evidence  of 
such  action. 

If  at  such  meetings,  or  within  twenty  days  thereafter,  any 
stockholder  of  any  such  corporations  object  to  such  con- 
solidation, and  demand  payment  for  his  stock,  if  such  con- 
solidation take  effect,  he,  or  the  new  company  may  apply  at 
any  time  within  sixty  days  after  such  meeting  of  the  stock- 

1  Laws  of  1 8S4,  chap.  367,  §  1.    For  1S67,  chap.  960.     As  to  how  the  cap- 

an  act  nearly  identical,  but  applying  ital  stock  may  be  increased,  see  Chap, 

only  to  corporations  organized  under  III.,  post. 
chap.  40  of  Laws  of  1S48,  see  Laws  of 


JO  THE   LAW   OF  CORPORATIONS. 

holders  to  the  supreme  court,  at  any  special  term  held  in 
any  county  in  which  the  new  corporation  may  have  its  place 
of  business,  upon  eight  days'  notice,  for  the  appointment  of 
three  appraisers  to  appraise  the  value  of  the  stock. 

The  court  will  thereupon  appoint  three  such  appraisers 
and  designate  the  time  and  place  of  the  first  meeting,  and 
will  give  such  directions  in  regard  to  the  proceedings  on 
such  appraisement  as  may  be  deemed  proper,  and  will  also 
direct  the  manner  in  which  payment  for  such  stock  shall  be 
made.  The  court  may  fill  any  vacancy  in  the  board  occur- 
ring through  refusal  or  neglect  to  serve  or  otherwise. 

At  the  time  and  place  designated  the  appraisers,  or  any 
two  of  them,  after  being  duly  sworn  honestly  and  faithfully 
to  discharge  their  duties,  must  estimate  and  certify  the  value 
of  such  stock  at  the  time  of  such  dissent  and  deliver  one 
copy  of  such  appraisal  to  such  new  company,  and  one  copy 
to  the  stockholders  if  demanded.  The  expenses  of  the 
appraisal  are  to  be  paid  by  the  company. 

When  the  corporation  has  paid  the  stockholder  the  value 
of  his  stock  so  appraised  as  directed  by  the  court,  all  interest 
of  such  stockholder  in  the  stock  and  in  the  property  of  such 
corporation  ceases,  and  such  stock  may  be  held  or  disposed 
of  by  the  new  corporation.1 

Duplicate  copies  of  the  agreement,  which,  it  will  be 
noticed  is  similar  in  its  terms  to  the  certificate  required 
under  the  Manufacturing  Act,  and  of  the  proceedings  at  the 
stockholders'  meetings  verified  as  required  above,  must  be 
filed  in  the  office  of  the  clerk  of  the  county  in  this  state 
where  the  operations  of  the  corporation  are  to  be  carried  on 
and  in  the  office  of  the  Secretary  of  State,  and  from  the 
time  of  such  filing,  the  corporations  agreed  to  be  consol- 
idated shall  be  merged  in  the  new  corporations,2  and  shall 

1  Laws    of    1S84,    chap.    367,    £  2.  time  of  the  dissent.     Traskv.  Peeks- 

Such  stockholder  is  entitled  to  interest  kill  Plow  Works,  6  Hun,  236. 
on  the  award  from  the  time  of  filing  2  Laws  of  1SS4,  chap.  367,  §  3. 

he    report    only,   and    not    from  the 


POWERS   AND    PRIVILEGES.  71 

possess  the  general  powers  of  corporations  and  be  entitled 
to  enjoy  the  rights,  franchises  and  privileges  of  each  of  the 
companies  from  which  it  has  been  formed,  subject,  however, 
to  the  liabilies,  restrictions,  duties  and  provisions  contained 
in  the  Manufacturing  Act,  so  far  as  the  same  may  be  appli- 
cable to  such  corporations.1 

Upon  the  consolidation  of  such  corporations  all  the 
powers,  privileges,  rights  and  franchises  of  both  vest  in  the 
new,  and  all  property  mentioned  in  the  agreement  is  deemed 
transferred  without  any  other  deed  or  transfer,2  and  such 
new  company  may  carry  on  the  business  of  any  of  the  com- 
panies so  consolidated.3  It  is  provided  that  the  rights  of 
creditors  shall  not  in  any  way  be  impaired  by  such  consolida- 
tion, and  any  suit  pending  against  any  of  the  consolidated 
companies,  or  its  stockholders,  shall  not  be  discontinued, 
but  may  be  prosecuted  to  completion,  or  the  new  company 
may  be  substituted  in  the  place  of  the  old.4 

Consolidation  of  Insurance  Companies. — The  directors  of  any 
two  companies  organized  under  chapter  four  hundred  and 
sixty-six  of  laws  of  1853,  or  its  amendments,5  may  enter  into 
and  make  an  agreement  under  their  respective  corporate 
seals  for  the  merger  of  one  of  the  companies  into  the  other, 
prescribing  the  terms  and  conditions  thereof,  the  mode  of 
carrying  the  same  into  effect,  the  amount  of  capital  (which 
cannot  be  larger  than  the  aggregate  capital  of  the  two),  the 
number  of  shares  into  which  it  is  to  be  divided,  with  such 
other  particulars  as  may  be  deemed  necessary,  not  incon- 
sistent with  the  provisions  of  the  act  under  which  they  are 
organized.  This  agreement  must  be  submitted  to  the  Super- 
intendent of  the  Insurance  Department  for  his  approval.8 

It  is  provided  that  such  an  agreement,  after  the  approval 
of  the  Superintendent  of  the  Insurance  Department,  shall 

1  Laws  of  18S4,  chap.  367,  §  4.  5  This  now  includes  only  fire  and 

4  Id.  §  5.  inland-navigation     insurance     com- 

3  Id.  £  7.  panies. 

4  Id.  §  6.  6  Laws  of  1S7S,  chap.  gS,  §  1. 


J2  THE    LAW    OF   CORPORATIONS. 

become  the  agreement  of  the  companies  only  after  it  has 
obtained  the  assent  of  a  majority  of  the  whole  number  of 
directors  of  each  company,  and  the  assent  of  one-half  of  the 
stockholders  owning  two-thirds  of  the  stock  of  each,  which 
assent  in  writing,  attached  to  the  agreement,  is  evidence  of 
the  assent  of  the  stockholders.1 

Upon  filing  such  agreements  or  duplicates  thereof,  with 
the  assent  of  the  stockholders  and  approval  of  the  Superin- 
tendent of  the  Insurance  Department,  in  the  office  of  the 
clerk  of  the  county  where  the  principal  place  of  business  of 
such  company  is  located  and  in  the  office  of  the  Superin- 
tendent of  the  Insurance  Department,  the  corporations  are 
merged  and  the  details  may  be  carried  into  effect,  and  the 
new  corporation  may  require  the  return  of  the  original  cer- 
tificates issued  to  the  stockholders  of  the  old  corporations 
and  issue  new  certificates  for  such  number  of  shares  of  its 
own  stock  as  such  stockholders  are  entitled  to  receive.2 
Similar  provisions  as  to  corporate  property  and  franchises 
and  as  to  the  rights  of  creditors  are  made  as  in  the  act  for 
the  consolidation  of  manufacturing  corporations.3 

Consolidation  of  Banks. — Any  two  or  more  banking  associa- 
tions organized  under  the  general  banking  laws  of  this  State, 
and  located  in  the  same  city,  village,  or  town  may  consoli- 
date into  a  single  association  to  be  located  in  the  same 
place.4 

An  agreement  under  their  respective  corporate  seals 
must  be  made  by  the  directors  of  the  banks  to  be  consoli- 
dated which  shall  prescribe  the  terms  and  conditions  of  the 
consolidation,  the  mode  of  carrying  it  into  effect,  the  name 
and  duration  of  the  new  association,  the  number  of  directors 
and  the  names  of  those  who  shall  constitute  the  first  board, 
the  time  and  place  of  holding  the  first  election  of  directors 
the  manner  of  converting  the  shares  of  each  into  the  new 
association,  with  such  other  details  as  may  be  deemed  expe- 

1  Laws  of  187s,  chap.  9S,  §  2.  3  Id.  £g  4  a»ci  5.     See  ante.  p.  71. 

2  Id.  g  3.  4  Laws  of  1SS2,  chap.  409,  §  48. 


POWERS    AND    PRIVILEGES.  73 

dient  not  inconsistent  with  the  Banking  Act.  Notice  of  the 
intention  to  consolidate  must  be  served  personally  or  by  mail 
upon  each  stockholder  of  each  association  at  least  ten  days 
before  entering  into  the  agreement.' 

The  written  consent  of  stockholders  owning  at  least  two- 
thirds  in  amount  of  the  capital  stock  of  each  association  is 
requisite  to  the  validity  of  the  agreement. 

Upon  the  presentation  of  the  agreement  duly  proved  or 
acknowledged,  together  with  proof  of  the  requisite  consent 
of  the  stockholders,  and  proof  of  the  service  of  notice  upon- 
each  stockholder,  to  the  Superintendent  of  the  Banking 
Department,  he  will  cause  an  examination  of  the  books, 
property,  effects  and  liabilities  of  such  association  to  be 
made,  and  from  the  results  of  such  examination  determine 
the  value,  in  his  judgment,  of  such  property  and  effects, 
above  and  beyond  the  debts  and  liabilities,  and  certify  the 
same  in  writing,  and  the  amount  so  determined  will  be  the 
capital  stock  of  the  consolidated  association  ; 3  and  such 
certificate  must  be  filed  in  the  office  of  the  clerk  of  the 
county  where  the  association  is  located,  and  a  certified  copy 
in  the  Banking  Department  of  the  State.3 

Recording  the  agreement  and  certificate  perfects  the 
consolidation,  and  the  separate  existence  of  the  constituent 
associations  ceases,  and  the  new  association  becomes  vested 
with  all  the  property  and  effects  and  becomes  subject  to  all 
the  obligations  and  liabilities  of  the  old/ 

Similar  provisions  exist  as  to  pending  suits  and  out- 
standing liabilities  as  in  the  act  for  the  consolidation  of 
manufacturing  corporations.5 

Within  twenty  days  after  filing  and  recording  the  certifi- 
cates in  the  county  clerk's  office  any  stockholder  of  any  of 
the  consolidated  associations  who  has  not  signed  the  assent 
to  the  consolidation  may  object,  in  writing,  to  such  consoli- 

1  Laws  of  1SS2,  chap.  409,  §  49.  4  Id.  §  53. 

2  W-  §50.  5Id.  ^54,  55- 

3  Id.  §51. 


74  THE   LAW   OF   CORPORATIONS. 

dation  and  demand  payment  for  his  stock,  and  within  three 
months  of  filing  such  dissent  the  association  must  pay  to 
him  the  value  of  his  stock  as  determined  in  the  certificate  of 
the  Superintendent  of  the  Banking  Department  ;  and  upon 
such  payment  his  interest  in  the  property  and  effects  of  such 
association  shall  cease,  and  the  stock  so  purchased  may 
be  held  and  disposed  of  by  the  association  for  its  own 
benefit.1 

Consolidation  of  Railroads. — Any  railroad  company  organ- 
ized under  the  laws  of  this  state,  or  of  this  state  and  any 
other  state,  and  operating  a  railroad  or  bridge  either  wholly 
within,  or  partly  within  and  partly  without  this  state,  may 
be  consolidated  with  any  other  railroad,  similarly  organized, 
or  with  a  road  organized  under  the  laws  of  any  other  state, 
whenever  such  railroad  or  branch,  or  any  part  of  the  same, 
form  or  may  form  a  continuous  line  by  means  of  any  inter- 
vening railroad,  bridge  or  ferry.2 

The  directors  of  such  companies  may  enter  into  an  agree- 
ment under  their  corporate  seals  for  the  consolidation  of  the 
companies,  prescribing  therein  the  terms  and  conditions  of 
such  consolidation,  the  mode  of  carrying  the  same  into  ef- 
fect, the  name  of  the  new  corporation,  the  number  and 
names  of  the  directors  and  other  officers,  and  who  shall  be 
the  first  directors  and  officers,  and  their  places  of  residence, 
the  number  of  shares  of  capital  stock,  the  amount  or  par 
value  of  each  share  and  the  manner  of  converting  the  old 
stock  into  the  new,  and  how  and  when  directors  and  officers 
shall  be  chosen,  with  such  other  details  as  they  may  deem 
necessary  to  perfect  the  consolidation. 

The  capital  stock  of  such  new  company  may  not  exceed 
the  par  value  of  the  capital  stock  of  the  companies  consoli- 

1  Laws  of  1882,  chap.  409,  §  56.  R'y.  Co.,  12  Abb.  N.  C.  230.     For  an 

2  Laws  of  1S69,  chap.  917,  §  I,  as  act  making  this  particularly  applica- 
amendedby  Laws  of  1881,  chap.  6S5.  ble  to  railroads  organized  under  the 
As  to  what  will  constitute  a  "  con-  Laws  of  Pennsylvania,  see  Laws  of 
tinuous  line"  within  the  meaning  of  1S75,  chap.  256. 

the  statute  see  People  v.  Boston,  etc., 


POWERS   AND    PRIVILEGES.  75 

dated  ;  nor  may  any  bonds  or  other  evidences  of  debt  be 
issued  as  a  consideration  for,  or  in  connection  with,  such 
consolidation. 

Such  agreement  must  be  submitted  to  the  stockholders 
of  each  of  the  companies  at  meetings  called  separately  for 
the  purpose  of  considering  it,  of  which  notice  must  be  given 
by  written  or  printed  notices,  stating  the  objects  of  such 
meeting,  and  delivered  to  such  stockholders  personally,  or 
sent  by  mail  when  their  post-office  address  is  known,  at 
least  thirty  days  before  the  time  of  holding  such  meeting, 
and  also  by  a  general  notice  published  daily,  for  at  least  four 
weeks,  in  the  city,  town  or  county  where  such  company 
has  its  principal  office  or  place  of  business. 

At  such  meeting  the  voting  must  be  by  ballot,  each  share 
being  entitled  to  one  vote,  and  if  two  thirds  of  all  the  votes 
of  all  the  stockholders  are  for  the  adoption  of  the  agreement, 
that  fact  must  be  certified  thereon  by  the  secretaries  of  the 
respective  companies,1  under  the  corporate  seal,  and  the 
agreement  so  adopted,  or  a  certified  copy,  must  be  filed  with 
the  secretary  of  state,  and  from  thence  must  be  deemed 
and  taken  to  be  the  agreement  and  act  of  consolidation  of 
such  companies  ; '  and  from  the  time  of  such  filing  the  con- 
solidation is  perfected  and  the  corporations  that  are  parties 
to  such  agreement  constitute  one  corporation  by  the  name 
provided  in  such  agreement.2 

Upon  the  consummation  of  the  act  of  consolidation  all 
the  rights,  privileges,  franchises,  and  property  of  the  old 
corporations,  including  stock  subscriptions  and  choses  in  ac- 
tion, vest  in  the  new  and  it  becomes  entitled  to  the  same 
without  further  act  or  deed.3 

Similar  provisions  exist  as  to  pending  suits,  the  rights  of 
creditors,  etc.,  as  in  the  act  for  the  consolidation  of  manufac- 
turing corporations.4 

1  Laws  of   1869,  chap.  917,  §  2,  as  !  Id.  §  4, 

amended  by  Laws  of  1SS0,  chap.  94.  4  Id.  ^  5,  ante,  71. 

5  Id.  §  3. 


j6  THE   LAW   OF   CORPORATIONS. 

Consolidation  of  Telegraph  Companies. — Any  telegraph  com- 
pany organized  under  the  laws  of  this  state  may  lease,  sell, 
or  convey  all,  or  any  part  of,  or  interest  in,  its  property, 
rights,  privileges  or  franchises  to  any  other  telegraph  com- 
pany, organized  under  the  laws  of  this  or  any  other  state  ; 
and  it  may  likewise  acquire  by  law,  purchase  or  conveyance 
such  interest  in  the  property,  rights,  privileges  or  franchises 
of  another  company  ;  and  it  may  make  payments  therefor 
in  its  own  stock,  money  or  property,  or  may  receive  stock, 
money  or  property  of  such  other  company  in  payment  for 
its  own. 

No  such  purchase,  sale,  lease  or  conveyance  will  be  valid 
until  it  has  been  ratified  and  approved  by  a  three-fifths  vote 
of  its  board  of  directors,  and  also  by  a  consent  thereto  in 
writing,  or  by  a  vote  at  a  general  meeting  duly  called  for 
that  purpose  of  three  fifths  in  interest  of  the  stockholders  in 
such  company  present,  or  represented  by  proxy  at  such 
meeting.1 

Rights  of  Creditors  on  Consolidation. —  Most  of  the  acts  that 
have  been  considered  contain  provisions  that  the  rights  of 
creditors  shall  not  be  impaired  by  consolidation,  and  that 
the  new  company  shall  assume  the  obligations  of  the  old. 

This  provision,  however,  does  not  constitute  the  new 
company  the  successor  of  all  its  components.  So  far  as  a 
creditor  of  one  of  the  original  companies  is  concerned,  the 
consolidated  company  is  the  successor  of  such  old  company  ; 
but  in  respect  to  the  property  of  the  other  companies,  it  is  a 
new  and  independent  company,  and  such  creditor  has  no 
claim  against  it  upon  their  original  contract,  but  only  by 
virtue  of  its  assumption  of  the  obligations  of  the  old  com- 
panies.2 

1  Laws  of  1 S70,  chap.  568.  without    making   the    new  company 

4  So  held  in  a  case  where  an  action  a  party.     Proutyv.  L.  S.  eV  M.  S.  R. 

Tvas  begun  against  one  of  two  com-  Co.  52   N.  Y.   363.     See  also  Board- 

panies  before  consolidation  and  judg-  man  v.   Id.  S4  N.  Y.  157.     Chase  v. 

ment  entered  against  such  company  Vanderbilt,  62  N.  Y.  307. 

after  the  consolidation  was  perfected 


rOWERS   AND    PRIVILEGES.  7/ 

The  consolidation  of  two  or  more  corporations  is  not  a 
surrender  of  their  personal  identity  and  corporate  existence 
to  the  extent  of  preventing  their  officers  doing  all  necessary 
acts  to  vest  the  new  company  with  the  property  of  the  old.1 

II.    REORGANIZATION. 

We  have  seen  heretofore  2  the  provisions  made  for  the 
extension  of  the  time  of  existence  limited  in  the  charter  of 
corporations. 

In  addition  to  these  there  are  several  provisions  for  the 
reorganization  of  corporations,  either  after  foreclosure,  or  in 
cases  where  it  becomes  desirable  to  reorganize  under  the 
Business  Act. 

The  latter  act  provides  for  two  distinct  classes  of  corpor- 
ations known  respectively  as  : 

i.   Full  liability  companies. 

2.  Limited  liability  companies.3 

In  "  full  liability  companies  "  all  the  stockholders  are  sever- 
ally individually  liable  to  the  creditors  of  the  company  for 
all  the  debts  and  liabilities  of  the  company.4  Such  compan- 
ies may  reorganize  as  "  Limited  liability  companies  "  as  fol- 
lows : 

Reorganization  as  "  Limited  Liability  Companies." — Any  corpor- 
ation organized  and  doing  business  as  a  "  Full  liability  com- 
pany "  under  the  Business  Act,  whose  debts,  liabilities,  or 
other  obligations  are  not  greater  than  the  amount  of  its  cap- 
ital stock  actually  paid  in  and  unimpaired,  may  reorganize 
as  a  "  Limited  liability  company,"  with  all  the  rights,  privi- 
leges and  duties,  and  subject  to  all  the  regulations  and  lia- 

1  Thus,  where  to  satisfy  the  United  tion  and  in   execution   of  the  terms 

States   Patent    Law,    which   requires  agreed   upon,   it    was    held    by    the 

every  assignment  of  a  patent  to  be  United  States  Circuit  Court  that  such 

in  writing,  a  conveyance,  executed  conveyance  was  valid.     Edison  E lee- 

by  the  officers  of  one  of  two  com  pan-  trie  Light  Co.  y.  New  Haven  Electric 

ies  consolidated    under   the  general  Co.,  21  Abb.  N.  C.  ng. 

laws  of  this  state,  was  made  after  the  !  Ante,  p.  52. 

consolidation,    in    pursuance    of    the  3  Laws  of  1S75,  ohap.  611,  i  33. 

authority  conferred  before  consolida-  4  Id.   ;J  34. 


78  THE    LAW    OF   CORPORATIONS 

bilities  pertaining  to  the  same,  together  with  the  privilege 
and  right  of  retaining  and  continuing  the  corporate  name  with 
the  word  "limited  "  as  its  last  word.1 

The  directors  must  publish  a  notice  signed  by  at  least  a 
majority  of  them  in  a  newspaper  published  in  the  county  in 
which  the  principal  business  office  of  the  company  is  located, 
once  a  week  for  three  successive  weeks,  calling  a  meeting  of 
the  stockholders,  and  mail  a  copy  of  the  same  to  each  stock- 
holder at  his  last  known  place  of  residence,  at  least  two 
weeks  previous  to  the  day  fixed  for  holding  such  meeting. 
The  notice  must  specify  the  object  of  the  meeting  and  the 
time  and  place  when  and  where  the  meeting  will  be  held. 

At  the  time  and  place  specified  in  the  notice  the  stock- 
holders must  organize  by  choosing  one  of  the  directors 
chairman  of  the  meeting  and  a  suitable  person  as  secretary, 
and  proceed  to  a  vote  of  those  present,  either  in  person  or 
by  proxy,  and  if  votes  representing  a  majority  of  all  of  the 
stock  of  the  company  shall  be  in  favor  of  the  change,  the 
chairman  and  secretary  with  two  other  directors  must  make 
a  certificate  of  the  proceedings,  showing  a  compliance  with 
the  act,  duly  acknowledged  and  stating: 

i.  The  name  of  the  corporation. 

2.  The  original  object  for  which  it  was  formed. 

3.  The  amount  and  description  of  the  capital  stock,  and 
into  how  many  shares  the  same  is  divided. 

4.  The  location  of  the  principal  business  office. 

5.  The  duration  of  the  corporation  (not  exceeding  fifty 
years). 

6.  The  names  of  the  directors  for  the  ensuing  year. 
This  certificate,  with  a  copy  of  the  by-laws,  must  be  filed 

in  the  office  of  the  secretary  of  state  and  of  the  clerk  of 
the  county  in  which  the  principal  business  office  of  the  com- 
pany is  located,  and  from  the  time  of  such  filing  such  cor- 
poration becomes  a  "  Limited  liability"  corporation,  as  if 

1  Laws  of  18S5,  chap.  535,  §§  1,  2. 


POWERS   AND    PRIVILEGES.  79 

originally  organized  as  such,  and  may  have  and  exercise  all 
the  rights  and  franchises  it  previously  had  and  exercised, 
and  no  stockholder  or  officer  will  thereafter  be  subject  to 
any  greater  liability  than  if  such  corporation  had  been 
originally  organized  as  a  limited  liability  company.1 

If  at  the  time  of  such  reorganization  the  capital  of  such 
company  has  not  been  paid  in  full,  it  is  provided  that  the 
time  for  payment  shall  begin  to  run  from  the  time  of  such 
reorganization,  and  the  time  and  manner  of  payment  shall 
be  the  same  as  if  such  company  were  then  originally  organ- 
ized as  a  "  Limited  liability"  company.2 

Reorganization  under  the  Business  Act. — It  is  provided  in  the 
Business  Act,3  that  any  corporation  organized  under  the 
general  laws  of  this  state,  except  such  corporations  as  are 
particularly  excepted  by  the  first  section  of  the  act  from 
organizing  under  it,4  may  come  under  and  avail  itself  of  the 
privileges  of  the  act. 

The  procedure  is  similar  to  that  of  the  reorganization  of 
"  Full  liability  companies"  as  "  Limited  liability  companies" 
(supra). 

The  directors  must  publish  a  notice  of  the  stockholders' 
meeting,  signed  by  at  least  a  majority  of  them,  in  a  news- 
paper published  in  the  county  where  the  principal  business 
office  of  the  company  is  located  for  at  least  three  successive 
weeks,  and  deposit  a  written  or  printed  copy  thereof  in  the 


1  Laws  of  1885,  chap.  535,  §  2.  companies,  or  corporations  intended 

2  Id.,  §  3.  to  derive  profit  from  the  loan  or  use 
8  Laws  of  1S75,  chap.  611,  §  32,  as  of  money,  or  safe-deposit  companies, 

amended  by  Laws  of  1885,  chap.  540.  including  the  renting  of  safes  in 
4  The  only  companies  expressly  burglar-  and  fire-proof  vaults.  Id. 
excepted  from  the  right  to  organize  §  1.  In  People  ex  rel.  Clauson  v. 
under  the  provisions  of  this  act  are  Newburg,  etc.,  Plank-road  Co.,  86 
companies  organized  for  the  purpose  N.  Y.  1,  it  was  held  that  a  plank- 
of  carrying  on  the  business  of  bank-  road  company  could  reorganize  un- 
ing,  insurance,  the  construction  and  der  this  act  ;  it  would  seem,  there- 
operation  of  railroads,  or  aiding  in  fore,  that  the  words  of  the  statute 
the  construction  thereof,  and  the  would  not  be  limited  by  judicial  con- 
business     of     savings-banks,     trust  struction. 


80  THE   LAW    OF   CORPORATIONS. 

post-office,  postage  prepaid,  addressed  to  each  stockholder 
at  his  last  known  place  of  residence  at  least  three  weeks 
before  the  day  for  holding  the  meeting.  The  notice  must 
specify  the  object  of  the  meeting  and  the  time  and  place 
when  and  where  it  is  to  be  held. 

At  the  time  and  place  specified  in  the  notice,  the  stock- 
holders must  organize  by  choosing  one  of  the  directors 
chairman  and  a  suitable  person  for  secretary,  and  proceed 
to  a  vote  of  those  present,  either  in  person  or  by  proxy,  and 
if  votes  representing  a  majority  of  all  the  stock  of  the  com- 
pany are  given  in  favor  of  reorganization,  the  officers  must 
make  a  certificate  of  the  proceedings,  showing  a  compliance 
with  the  act,  duly  acknowledged,  in  which  shall  be  stated: 

i.  The  name  of  the  corporation. 

2.  The  object  for  which  it  is  formed,  including  the  nature 
and  locality  of  its  business. 

3.  The  amount  and  description  of  the  capital  stock. 

4.  The  number  of  shares  of  which  such  capital  stock 
consists. 

5.  The  location  of  the  principal  business  office. 

6.  The  duration  of  the  corporation  (not  exceeding  fifty 
years). 

7.  The  names  of  the  directors  for  the  ensuing  year. 
This  certificate,  with  a  copy  of  the  by-laws,  must  be  filed 

in  the  office  of  the  secretary  of  state,  who  will  thereupon 
issue  to  the  directors  named  therein  a  certificate  setting 
forth  that  such  corporation  is  fully  reorganized  in  accordance 
with  the  act.  This  will  include  a  copy  of  the  certificate  of 
the  proceedings  (not  including  the  by-laws),  the  date  and 
place  of  the  stockholders'  meeting,  the  names  of  the  direc- 
tors elected,  and  a  statement  that  all  the  provisions  of  the 
act  have  been  duly  observed  in  the  reorganization. 

Within  ten  days  from  the  issuing  of  such  certificate  by 
the  secretary  of  state  it  must  be  filed  in  the  office  of  the 
clerk  of  the  county  in  which  the  principal  business  office  of 
such  corporation  is  situated.     From  the  time  of  such  filing 


POWERS   AND    PRIVILEGES.  8 1 

the  corporation  will  be  deemed  to  be  a  corporation  organ- 
ized under  the  Business  Act,  and  if  originally  organized 
under  any  general  law  of  this  state  it  may  continue  to  have 
and  exercise  all  the  rights  and  franchises  it  had  and  exer-' 
cised  under  the  laws  pursuant  to  which  it  was  originally 
incorporated. 

It  is  provided  that  the  existing  liabilities  of  a  corporation 
shall  in  no  way  be  affected,  changed  or  diminished  by  such 
reorganization. 

The  fees  for  filing,  etc.,  are  the  same  as  for  the  original 
organization  under  the  act. 

Reorganization  after  Foreclosure.1 — Whenever  the  franchises, 
privileges,  easements,  rights  and  liberties  of  any  corporation 
created  by  any  act  of  the  legislature  of  this  state,  or  organ- 
ized under  any  general  law  of  the  state  and  empowered  by 
such  act  to  mortgage  its  property  or  franchises,  have  been 
or  may  be  sold  by  virtue  of  any  mortgage  executed  by  such 
corporation,  and  the  purchaser  or  purchasers  have  acquired 
title  to  the  same  in  the  manner  prescribed  by  law,  such 
purchaser  or  purchasers  may  associate  with  themselves  any 
number  of  persons,  and  upon  making  and  filing  articles  of 
association  as  prescribed,  they  and  their  associates  and  their 
successors  and  assigns,  "  being  residents  of  this  state,"  may 
become  a  bod)-  corporate,  and  may  take  and  receive  a  con- 
veyance, and  shall  thereupon  succeed  to  possess,  exercise 
and  enjoy  all  the  rights,  powers,  franchises,  privileges,  ease- 
ments, liberty,  property,  estate  and  effects  of  which  the  title 
shall  have  been  so  acquired  and  conveyed.2 

If  such  corporation  was  organized  under  any  general 
laws  of  the  state  the  certificate  must  set  forth  the  particulars 


1  Upon  foreclosure  of  a  mortgage  bonds  and  share  in  the  distribution 

given   to   secure  its   bonds,  a  holder  accordingly  up  to  the  amount  of  his 

of   bonds  pledged  as  collateral  is  not  debt.   Duncombv.  A".  Y. ,  Housatonic, 

limited  to  proof  of  an  amount  simply  tb°  North.  A'.  R.  Co..  S4  N.  Y.  190. 
equal  to  the  amount  of   his  debt,  but  s  Laws  of  1S73,  chap.  469,  §  1. 

may  prove  the  whole  amount  of  his 


82  THE   LAW    OF   CORPORATIONS. 

required  by  the  act  to  be  set  forth  in  the  original  certificate 
of  incorporation.1 

If  it  was  created  by  any  special  act  the  certificate  must 
set  forth  the  following  particulars,  namely : 

i.  The  name  of  the  corporation  so  to  be  formed. 

2.  The  amount  of  capital  stock  (which  cannot  exceed 
the  amount  of  capital  stock  of  the  former  corporation 
authorized  by  law  at  the  time  of  the  sale)  and  the  number 
of  shares  of  which  the  stock  shall  consist. 

3.  The  title  and  time  of  passage  of  the  original  act 
creating  the  former  corporation,  and  any  other  act  or  acts 
relating  thereto. 

4.  The  number  of  directors  who  shall  manage  the  con- 
cerns of  the  company,  and  the  names  of  the  first  board  of 
directors,  who  shall  hold  their  offices  for  one  year  and  until 
others  are  chosen  in  their  places.2 

The  certificate  must  be  executed  in  duplicate  and  prop- 
erly acknowledged,  and  one  of  the  duplicates  must  be  filed 
in  the  office  of  the  secretary  of  state  and  the  other  in  the 
office  of  the  clerk  of  the  county  in  which  the  former  corpora- 
tion had  its  principal  place  of  business. 

Thereupon  the  corporation  so  formed  shall  exist  for  the 
time,  and  may  and  shall  possess,  exercise  and  enjoy  all  the 
powers,  privileges,  rights,  liberties,  easements  and  franchises 
possessed  by  the  former  corporation,  and  in  the  same  man- 
ner and  to  the  same  extent,  and  with  the  same  force  and 
effect  as  they  could  have  been  exercised  by  the  former  cor- 
poration if  such  sale  had  not  been  made. 

Whenever  by  the  decree  of  the  court  having  jurisdiction 
of  the  foreclosure  proceedings  it  has  been  adjudged  and 
determined  what  powers,  privileges,  rights,  liberties,  ease- 
ments and  franchises  were  possessed  and  enjoyed  by  such 
former  corporation  at  the  time  of  entering  such  decree,  and 
were  therein  ordered  to  be  sold,  the  same  shall  be  possessed 
and  enjoyed  by  the  new  corporation  to  which    they  have 

1  Laws  of  1S73,  chap.  469,  §  2.  -  Id.  §  3. 


POWERS   AND   PRIVILEGES.  83 

been  conveyed  by  virtue  of  the  decree  of  foreclosure.  But 
no  omission  in  such  decree  to  set  forth  or  define  any  of  the 
rights,  privileges  or  franchises  of  such  former  corporation 
shall  in  any  way  impair  the  rights  of  such  purchasers,  or  of 
such  new  corporation,  to  possess  and  enjoy  all  that  was 
possessed  by  the  former  corporation  at  the  time  of  such 
sale.1 

The  tax  of  one  eighth  of  one  per  cent,  on  the  capital 
stock  must  be  paid  on  such  reorganization,  the  same  as  for 
the  original  organization  of  a  corporation.2 

Same.  Railroads. — Special  provisions  are  made  for  the 
reorganization  of  railroads  after  foreclosure. 

In  case  a  railroad  and  property  connected  therewith, 
and  the  rights,  privileges  and  franchises  of  any  corporation 
(except  a  street-railroad  company  created  under  the  general 
railroad  law  of  this  state,  or  existing  under  any  special  or 
general  act  of  the  legislature),  shall  be  sold  under  a  decree 
of  foreclosure,  the  purchasers,3  and  such  persons  as  they 
may  associate  with  themselves,  and  their  grantees  or  assignees, 
or  a  majority  of  them,  may  become  a  body  politic  and  cor- 
porate, and  take  the  title  and  property  included  in  such  sale, 
and  have  all  the  franchises,  rights,  powers,  privileges  and 
immunities  which  were  possessed  before  such  sale  by  the 
corporation  whose  property  has  been  sold. 

A  certificate,  duly  executed  and  acknowledged,  must  be 
filed  in  the  office  of  the  secretary  of  state,  in  which  must  be 
described  by  name  and  by  reference  to  the  act  or  acts  of 
the  legislature  of  this  state  under  which  it  was  organized 
the   corporation  whose   property  and    franchises  have  been 

1  Laws  of  1873,  chap.  469,  §  4,  as  merits    in    regard    to    common    and 

amended   by    Laws    of    1880,    chap.  preferred  stock  as  may  be  desirable. 

113.     By   Laws  of    1890,   chap.  193,  2  People    ex    rel.  Mertens   v.    Cook, 

when  the  property  of  a  corporation  no  N.  Y.  443. 

organized  under  the  Manufacturing  3  A  mortgagee  may  be  a  purchaser 

Act  is  sold  under  a  decree  of  fore-  on  foreclosure  sale.     Laws  of   1857, 

closure,  or  under  an  execution  or  by  chap.  444,  §    1.     And  a  foreign  cor- 

a  receiver   on    proceedings    for    dis-  poration    may  purchase    land    mort- 

solution,  the  creditors  may  purchase  gaged  to  it  by  a  corporation  of  this 

the  property  and  reorganize  the  com-  state,  and    hold    the    same    for    five 

pany,  and    may    make    such    agree-  years.    Laws  of  1S77,  chap.  15S,  §  I. 


84  THE   LAW    OF   CORPORATIONS. 

acquired,  and  also  the  court  by  authority  of  which  such  sale 
was  made  ;  giving  the  date  of  the  judgment  or  decree  direct- 
ing the  same,  together  with  a  brief  description  of  the  prop- 
erty sold,  and  also  : 

i.  The  name  of  the  new  corporation. 

2.  The  maximum  amount  of  its  capital  stock,  the  num- 
ber of  shares  into  which  the  same  is  to  be  divided,  specify- 
ing how  much  of  the  same  shall  be  common  and  how  much 
preferred,  and  the  classes  thereof,  and  the  rights  pertaining 
to  each  class. 

3.  The  number  of  directors  by  whom  the  affairs  of  the 
new  corporation  are  to  be  managed,  and  the  names  and  resi- 
dences of  those  selected  to  act  as  directors  for  the  first  year. 

4.  Any  plan  or  agreement  which  may  have  been  entered 
into  pursuant  to  the  second  section  of  the  act. 

Such  plan,  agreement  and  articles  may  regulate  voting 
on  the  part  of  the  holders  of  the  preferred  and  common 
stock  of  the  company,  and  may  provide  for  and  allow  voting 
at  such  meetings  and  for  directors  on  the  part  of  the  bond- 
holders of  the  old  company,  or  of  the  new  on  such  conditions 
as  may  be  therein  declared. 

Upon  filing  such  certificate  in  the  office  of  the  secretary 
of  state,  the  persons  executing  the  same  and  their  successors 
and  assigns,  provided  that  a  majority  of  such  persons  are  citi- 
zens and  residents  of  tins  state,  become  a  body  politic  and 
corporate  by  the  name  specified  in  the  certificate,  and  are 
vested  with,  and  are  entitled  to  enjoy  all  the  rights,  privileges 
and  franchises  which  at  the  time  of  the  sale  belonged  to  or 
were  vested  in  the  corporation  which  last  owned  the  prop- 
erty, or  its  receiver.1 

Where  purchasers  have  acquired  the  property  and  fran- 
chises of  a  railroad  in  pursuance  of  a  plan  of  readjustment 
making  provision  for  the  representation  of  the  interests  of 
the  former  stockholders  and  creditors  in  the  bonds  or  stock 

1  Laws  of  1874,  chap.  430.  §  1,  as  amended  by  Laws  of  1876,  chap.  446. 


POWERS   AND    PRIVILEGES.  85 

of  the  new  corporation,  such  new  corporation  may  issue  its 
bonds  and  stock  in  pursuance  of  such  plan,  and  may  at  any 
time  within  six  months  after  its  organization  compromise, 
settle,  or  assume  the  payment  of  any  debt,  claim  or  liability 
of  the  former  company  upon  such  terms  as  may  be  lawfully 
approved  by  a  majority  of  the  agents  or  trustees  intrusted 
with  the  carrying  out  of  such  plan  of  reorganization,  and 
may  establish  preferences  in  respect  to  the  payment  of  divi- 
dends in  favor  of  any  portion  of  its  capital  stock. 

The  supreme  court  may  direct  a  sale  of  the  whole  of  the 
property,  rights  and  franchises  covered  by  a  mortgage  or 
mortgages  foreclosed  at  any  one  time,  either  in  case  of  non- 
payment of  interest  only,  or  of  both  principal  and  interest 
due  and  unpaid  ;  but  such  sale  and  formation  of  new  com- 
pany will  not  interfere  with  the  authority  or  possession  of 
the  receiver  until  his  removal  or  discharge  by  order  of  the 
court.1 

Every  stockholder  in  a  company  whose  property  and 
franchises  have  been  sold  mayassent  to  the  plan  of  reorgani- 
zation pursuant  to  which  the  same  has  been  purchased  at 
any  time  within  six  months  after  the  organization  of  the 
new  company,  and  by  complying  with  the  terms  and  con- 
ditions of  the  plan  become  entitled  to  his  pro  rata  benefits 
therein  according  to  its  terms.2 

This  act  repeals  section  2  of  chapter  502  of  Laws  of  1853, 
which  gave  to  each  stockholder  of  such  a  company,  upon 
paying  within  six  months  after  the  sale  under  foreclosure  to 
the  purchaser  a  sum  equal  to  such  proportion  of  the  price 
paid  by  him  as  his  individual  stock  bore  to  the  whole  capital 
stock  of  the  company,  the  right  to  have  the  same  relative 
amount  of  stock  or  interest  in  the  company  and  its  road 
franchises  and  other  property.3 

After  the  foreclosure  sale,  the  only  property  interest 
which  a  stockholder  of  the  old  company  has  left  is  in  the 

1  Laws  of  1874,  chap.  430.  §  2,  as  -  Id.  £  3. 

amended  by  Laws  of  1876,  chap.  446.  3  Pratt  v.  Munson,  S4  N.  Y.  582. 


86  THE    LAW   OF   CORPORATIONS. 

surplus,  if  any,  after  satisfying  the  mortgage  and  other  pref- 
erential claims.  The  statute  secures  to  him  the  option  of 
joining  the  new  company  by  a  compliance  with  the  terms 
of  the  plan.  But  this  option  must  be  exercised  within  six 
months,  and  if  he  fails  within  that  time  to  exercise  it,  he 
loses  the  right  to  join  or  become  interested  in  the  new  com- 
pany, or  to  acquire  any  interest  in  the  property.1 

If  the  maximum  amount  of  capital  stock  of  any  railroad 
company  as  set  forth  in  the  certificate  of  incorporation  on 
file  in  the  office  of  the  secretary  of  state  is  insufficient  to 
carry  out  any  plan  of  reorganization  set  forth  in  such  certi- 
ficate, the  majority  of  the  directors  may  execute  a  new  cer. 
tificate  setting  forth  such  insufficiency  and  the  additional 
amount  of  capital  stock  required  to  carry  out  such  plan  of 
reorganization,  and  may  thereupon,  with  the  approval  of  the 
state  engineer  and  surveyor,  issue  such  capital  stock  the 
same  as  if  it  had  been  mentioned  in  the  original  certificate.2 

In  the  case  of  roads  formed  by  the  consolidation  of  roads 
lying  partly  in  this  state  and  partly  in  other  states,  where  a 
decree  of  foreclosure  has  been  made  by  a  court  of  compe- 
tent jurisdiction  of  the  state  or  states  in  which  the  greater 
part  of  such  line  of  railroad  is  situated,  such  judgment  or 
decree  and  the  sale  thereunder  may  be  confirmed  by  the 
supreme  court  of  this  state  in  the  judicial  district  in  which 
some  part  of  such  line  is  situated. 

When  so  confirmed,  the  sale  thereunder  will  operate  to 
pass  title  to  the  purchaser  of  that  part  of  the  line  of  railroad 
lying  in  this  state,  with  its  appurtenances  and  franchises, 
with  the  same  force  and  effect  as  if  the  sale  had  been  made 
under  the  judgment  and  decree  of  a  court  of  competent 
jurisdiction  of  this  state;  and  if  a  receiver  of  the  entire  line 
has  been  appointed  by  such  a  court  of  the  state  where  the 
greater  part  of  the  line  is  situated,  he  may  perform  within 
this  state  the  duties  of  his  office,  not  inconsistent  with   the 

1  Vatable  v.  N.  Y.,  L.  E.  <Sr   W.  2  Laws  of  iSSo,  chap.  155,  §  1. 

K.  A'.  Co.,  96  N.Y.  49. 


POWERS  AND    PRIVILEGES.  S? 

laws  of  the  state,  and  may  sue  and  be  sued  in  the  courts  of 
the  state.1 

Where  a  corporation  is  organized,  after  such  sale  and 
confirmation,  in  the  state  where  the  greater  portion  of  the 
line  is  situated,  for  the  purpose  of  taking  title  to  the  entire 
line  of  railroad  so  sold,  it  may  operate  that  portion  of  the 
line  within  this  state  and  have  all  the  rights  and  franchises 
of  the  corporation  executing  the  mortgage,  such  as  are  con- 
ferred upon  railroad  corporations  organized  under  the  laws 
of  this  state,  and  will  be  subject  to  all  the  duties  and  liabil- 
ities of  such  corporations.  An  exemplified  copy  of  the  char- 
ter, certificate  of  incorporation,  or  articles  of  association 
under  and  by  virtue  of  which  such  corporation  is  created, 
and  of  the  judgment  or  decree  under  which  the  entire  line 
was  sold  and  a  certified  copy  of  the  order  or  judgment  or 
decree  of  confirmation  and  approval  must  be  filed  in  the 
office  of  the  secretary  of  state.2 

Reorganization  of  Plank-Road  Companies. — When       a       plank 

road  or  turnpike  road  has  been  sold  upon  the  foreclosure  of 
a  mortgage  given  by  such  a  company  upon  its  road  and 
franchise,  to  secure  the  payment  of  any  bonds  of  such  com- 
pany, the  purchaser  at  such  sale  may  maintain  and  operate 
such  road  in  the  same  manner,  and  with  the  same  privileges, 
and  subject  to  the  same  restrictions  as  the  original  company 
at  the  time  the  sale  was  made.3 

Such  purchaser  or  purchasers,  on  associating  with  him  or 
them  not  less  than  four  persons,  may  organize  a  corpora- 
tion for  the  purpose  of  maintaining  such  road  in  the  man- 
ner prescribed  for  organizing  plank-road  companies.4 

Any  stockholder  of  such  company  has,  for  six  months 
after  such  sale  under  foreclosure,  the  right,  on  paying  to  the 
purchaser  or  purchasers  under  such  sale,  or  to  the  mort- 
gagees named  in  such  mortgage,  for  the  use  and  benefit  of 
such    purchasers,-  a  sum  equal  to  such  proportion  of   the 

1  Laws  of  1879,  chap.  505,  §  I.  3  Laws  of  1866,  chap.  780,  §  I. 

8  Id.  §  2.  4Id.  §  2.     (See  ante,  p.  34.) 


88  THE   LAW   OF   CORPORATIONS. 

price  paid  on  such  sale,  and  the  costs  and  expenses  thereof, 
as  such  stockholder's  stock  in  such  company  bears  to  the 
whole  capital  stock,  and  upon  such  payment  to  have  the 
same  relative  amount  of  stock  or  interest  in  such  company 
and  its  road,  franchises  and  property.1 

Proceedings  for  the  Sale  of  Corporate  Real  Property. — Whenever 
any  corporation  or  joint  stock  association  is  required  by  law 
to  make  application  to  the  court  for  leave  to  mortgage,  lease 
or  sell  its  real  estate,  the  proceeding  therefor  is  as  follows:2 

The  proceeding  is  instituted  by  the  presentation  to  the 
supreme  court  of  the  district  or  the  county  court  of  the 
county  where  the  real  property,  or  some  part  of  it,  is  situated, 
by  the  corporation  or  association,  applicant,  of  a  petition 
setting  forth  the  following  facts  : 

i.  The  name  of  the  corporation  or  association,  and  of  its 
directors,  trustees  or  managers,  and  of  its  principal  officers, 
and  their  places  of  residence. 

2.  The  business  of  the  corporation  or  association,  or  the 
object  or  purpose  of  its  incorporation  or  formation,  and  a 
reference  to  the  statute  under  which  it  was  incorporated  or 
formed. 

3.  A  description  of  the  real  property  to  be  sold,  mort 
gaged  or  leased,  by  metes  and  bounds,  with  reasonable  cer 
tainty. 

4.  That  the  interests  of  the  corporation  or  association 
will  be  promoted  by  the  sale,  mortgage  or  lease  of  the  real 
property  specified,  and  a  concise  statement  of  the  reasons 
therefor. 

5.  That  such  sale,  mortgage  or  lease  has  been  authorized, 
by  a  vote  of  at  least  two-thirds  of  the  directors,  trustees  or 

1  Laws  of  1853,  chap.  502,  §  2.  This  nothing  repugnant  to  the   section   in 
section,  so  far  as  relates  to    railroad  later  statutes  relating  to  plank-roads, 
companies,  has  been  repealed  by  im-  it  is,  so  far  as  such  companies  are  con- 
plication    by  later  statutes,  {see  ante,  cerned,  undoubtedly  still  in  force, 
p.  85  ;)but  as  such  statutes  apply  only  to  2  Code  Civ.  Proa,  §  3390. 
the  foreclosure  of  railroads. and  there  is 


POWERS  AND    PRIVILEGES.  89 

managers  or  the  corporation  or  association,  at  a  meeting 
thereof,  duly  called  and  held,  and  a  copy  of  the  resolution 
granting  such  authority. 

6.  The  market  value  of  the  remaining  real  property  of 
the  corporation  or  association,  and  the  cash  value  of  its  per- 
sonal assets,  and  the  total  amount  of  its  debts  and  liabilities, 
and  how  secured,  if  at  all. 

7.  The  application  proposed  to  be  made  of  the  moneys 
realized  from  such  sale,  mortgage  or  lease. 

8.  Where  the  consent  of  the  shareholders,  stockholders 
or  members  of  the  corporation  or  association  is  required  by 
law  to  be  first  obtained,  a  statement  that  such  consent  has 
been  given,  and  a  copy  of  the  consent  or  a  certified  tran- 
script of  the  record  of  the  meeting  at  which  it  was  given, 
shall  be  annexed  to  the  petition. 

9.  A  demand  for  leave  to  mortgage,  lease  or  sell  the  real 
estate  described. 

The  petition  must  be  verified  in  the  same- manner  as  a 
verified  pleading  in  an  action  in  a  court  of  record.' 

Upon  presentation  of  the  petition,  the  court  may  immedi- 
ately proceed  to  hear  the  application,  or  it  may,  in  its  dis 
cretion,  direct  that  notice  of  the  application  shall  be  given 
to  any  person  interested  therein,  as  a  member,  stockholder, 
officer  or  creditor  of  the  corporation  or  association,  or  other- 
wise, in  which  case  the  application  will  be  heard  at  the  time 
and  place  specified  in  such  notice,  and  the  court  may  in  any 
case  appoint  a  referee  to  take  the  proofs  and  report  the  same 
to  the  court  with  his  opinion  thereon.2 

Upon  the  hearing  of  the  application,  if  it  appear  to  the 
satisfaction  of  the  court,  that  the  interests  of  the  corpora- 
tion or  association  will  be  promoted  thereby,  an  order  may 
be  granted  authorizing  it  to  sell,  mortgage  or  lease  the  real 
property  described  in  the  petition,  or  any  part  thereof,  for 
such  sum  and  upon  such  terms  as  the  court  may  prescribe, 

1  Code  Civ.  Pro.,  §  3391.  s  Id.  §  3392. 


90  THE   LAW   OF   CORPORATIONS. 

and  directing  what  disposition  shall  be  made  of  the  proceeds 
of  such  sale,  mortgage  or  lease. 

Any  person  whose  interests  may  be  affected  by  the  pro- 
ceedings, may  appear  upon  the  hearing  and  show  cause  why 
the  application  should  not  be  granted.1 

If  the  corporation  or  association  is  insolvent,  or  its  prop- 
erty and  assets  are  insufficient  to  fully  liquidate  its  debts 
and  liabilities,  the  application  will  not  be  granted,  unless  all 
the  creditors  of  the  corporation  have  been  served  with  a 
notice  of  the  time  and  place  at  which  the  application  shall 
be  heard.2 

Service  of  notices  may  be  made  either  personally  or,  in 
case  of  absence,  by  leaving  the  same  at  the  place  of  residence 
of  the  person  to  be  served,  with  some  person  of  mature  age 
and  discretion,  at  least  eight  days  before  the  hearing  of  the 
application,  or  by  mailing  the  same,  duly  enveloped  and 
addressed  and  postage  paid,  at  least  sixteen  days  before  such 
hearing.3 

In  all  applications  made,  as  above  provided,  where  the 
mode  or  manner  of  conducting  any  or  all  of  the  proceedings 
thereon  are  not  expressly  provided  for,  the  court  before 
whom  such  application  may  be  pending  may  make  all  the 
necesasry  orders  and  give  the  proper  directions  to  carry  into 
effect  the  object  and  intent  of  this,  or  of  any  act  authoriz- 
ing the  sale  of  corporate  real  property,  and  the  practice  in 
such  cases  must  conform,  as  near  as  may  be,  to  the  ordi- 
nary practice   in  such  court.4 

MISCELLANEOUS   SPECIAL   POWERS   AND   PRIVILEGES. 

Changing  Place  of  Business.  Manufacturing  Act. — Any  com- 
pany organized  under  the  Manufacturing  Act  may  change  its 
place  of  business  by  a  vote  of  the  stockholders  representing 
two-thirds  of  the  stock  at  any  meeting  of  the  stockholders 

1  Code  Civ.  Pro.,  §  3393.  effect  May  1st,  1890,  and  do  not  af- 

2  Id.  §  3394.  feet  any  proceeding  previously  com- 

3  Id-  §  3395-  menced.     Id.  §  3397. 

4  Id.  §  3396.  These  provisions  took 


POWERS   AND   PRIVILEGES.  91 

regularly  called,  and  executing  and  acknowledging  an 
amended  certificate  specifying  the  name  of  the  towns  or 
cities  from  and  to  which  the  business  location  of  the  com- 
pany is  to  be  changed,  and  in  other  respects  conforming  to 
the  original  certificate. 

Such  amended  certificate  must  be  signed  by  the  president 
and  two  thirds  of  the  directors  of  the  company  and  filed  in 
the  office  of  the  secretary  of  state  and  in  the  office  of  the 
clerk  of  the  county  where  the  business  operations  of  the 
company  are  to  be  carried  on,  and  published  weekly  in  two 
papers  in  the  towns  or  cities  from  and  to  which  the  business 
operations  have  been  removed,  and  are  to  be  carried  on,  for 
the  term  of  three  months.  But  the  property  of  such  com- 
pany is  liable  to  taxation  in  any  county  where  such  property 
may  be,  or  in  which  its  business  may  be  done,  to  the  extent 
of  its  property  in  any  such  county.  ' 

No  company  organized  under  the  above  act  will  be  deemed 
or  taken  to  have  a  principal  office  or  place  for  transacting 
its  financial  concerns  other  than  that  at  which  the  operations 
of  the  company  are  carried  on,  unless  within  the  month  of 
May  in  each  year  the  president  and  treasurer,  or  a  majority 
of  the  trustees,  make  a  duplicate  certificate,  stating  the 
amount  of  the  then  capital  of  such  company,  and  the  portion 
of  such  capital  not  invested  in  real  estate,  and  stating  that 
such  company  then  has  a  principal  office  for  transacting  its 
financial  concerns  in  a  county  other  than  that  in  which  the 
operations  of  the  company  are  carried  on. 

It  must  state  the  town  or  city  in  which  such  financial 
office  is  located,  and  that  the  president  and  treasurer  and  a 
majority  of  the  trustees  of  such  company  are  then  actually 
residents  of  such  town  or  city. 

The  duplicate  certificates  must  be  signed  and  sworn  to 
by  the  persons  making  them  and  filed,  the  one  in  the  clerk's 
office  of  the  county  where  the  operations  of  the  company 

1  Laws  of  1864,  chap.  517,  §  1. 


92  THE   LAW    OF   CORPORATIONS. 

are  carried  on  and  the  other  in  the  clerk's  office  of  the 
county  in  which  such  financial  office  is  located.1 

Same.  Business  Corporations. — Corporations  organized  un- 
der the  Business  Act  may  change  their  place  of  business  by 
the  consent  of  the  stockholders  owning  two  thirds  in  amount 
of  the  capital  stock.  A  certificate  must  be  signed  by  such 
stockholders,  either  in  person  or  by  attorney  duly  authorized 
and  acknowledged  or  proved,  and  filed  in  the  office  of  the 
-secretary  of  state,  and  of  the  clerk  of  the  county  in  which 
the  principal  business  office  of  such  corporation  is  situated. 

Upon  the  filing  and  recording  of  such  certificates  the 
principal  business  office  of  such  corporation  will  be  deemed  to 
be  changed  as  therein  stated.  " 

Same.  Banks. — Any  bank  or  banking  association  organized 
under  the  laws  of  this  state  may  apply  at  any  special  term 
of  the  supreme  court  held  in  the  county  in  which  its  office 
of  discount  and  deposit  is  located,  for  an  order  authorizing 
it  to  change  its  place  of  business  to  another  place  in  the 
same  or  an  adjoining  county.3 

Notice  of  intention  to  make  such  application,  signed  by 
the  two  principal  officers  of  the  bank,  must  be  published 
once  a  week  for  four  weeks  in  a  newspaper  published  in  the 
city  of  Albany,  and  for  the  same  time  in  a  newspaper  pub- 
lished in  the  county  in  which  the  office  of  such  bank  or 
banking  association  is  located.  Such  newspapers  to  be 
designated  by  the  Superintendent  of  the  Banking  Depart- 
ment, and  satisfactory  proof  of  such  publication  must  be  made 
to  the  court  upon  the  application  for  the  change. 

This  application  must  be  by  a  petition  setting  forth  the 
grounds  of  the  application,  and  must  be  signed  by  a  majority 
of  the  board  of  directors,  and  be  accompanied  by  the  written 

1  Laws  of  1S61,  chap.  170,  §  2.    The  named  in  the  certificates  as  that  in 

personal  estate  of  such  company  for  which  such  financial  office  is  located. 

the  year  following  the   first  day  of  See  Chap.  IX.,  post. 

June  after  filing  such  certificates,  is  2  Laws  of  1875,  chap  611,  §  31. 

taxable  only   in    the    town   or  ward  '       3  Laws  of  1S87,  chap.  517,  §  I. 


POWERS   AND    PRIVILEGES.  93 

assent  to  the  proposed  change  of  location  of  at  least  two 
thirds  in  amount  of  the  shareholders  of  such  bank,  and  also 
by  the  approval  in  writing  of  the  Superintendent  of  the 
Banking  Department.1 

If  the  court  is  satisfied  that  there  is  no  reasonable  objec- 
tion to  such  change  it  will  make  an  order  authorizing  the 
corporation  to  change  its  place  of  business  to  the  location 
designated  in  the  petition. 

A  copy  of  such  order  must  be  filed  in  the  office  of  the 
clerk  of  the  county  in  which  such  corporation  is  located  and 
also  in  the  office  of  the  superintendent  of  the  banking 
department,  and  must  be  published  once  a  week  for  four 
successive  weeks  in  the  newspapers  in  which  the  notice  of 
application  wras  published.2 

When  these  requirements  have  been  complied  with,  such 
corporation  may,  upon  or  after  the  day  specified  in  the  order 
of  the  court,  remove  its  property  and  effects  to  the  location 
designated  in  the  order,  and  thereafter  that  will  be  its  sole 
business  location. 

In  the  new  location  such  corporation  will  have  all  the 
rights  and  powers  to  which  it  was  entitled  in  its  former  loca- 
tion ;  but  no  liability  incurred  or  existing  at  the  time  of 
such  change  shall  be  impaired  thereby.3 

Change  of  Name. — As  we  have  seen,4  the  restrictions  as  to 
what  name  may  be  adopted  by  a  corporation  are  very  few. 
The  laws  are  equally  liberal  in  regard  to  the  change  of 
name. 

It  is  provided  that  any  corporation,  except  banks,  bank- 
ing associations,  trust  companies,  life,  health,  accident, 
marine  and  fire  insurance  companies  may  apply  at  any 
special  term  of  the  supreme  court  sitting  in  the  count}'  in 
which  it  has  its  principal  business  office  for  an  order  to 
authorize  it  to  assume  another  corporate  name.6 

1  Laws  of  1SS7,  chap.  517,  §  2.  4  Chap.  L,  ante. 

3  Id.  §  3.  5  Laws  of  1S70,  chap.  322,  §   1,  as 

3  Id.  §  4.  amended  by  Laws  of  1S76,  chap.  280. 


94  THE    LAW   OF   CORPORATIONS. 

Such  application  must  be  by  petition,  which  must  set 
forth  the  grounds  of  the  application,  and  that  it  is  made  in 
pursuance  of  a  resolution  of  the  directors  of  the  corporation, 
and  must  be  verified  by  the  chief  officer  thereof. 

Notice  of  the  application  must  be  published  forsix  weeks 
in  a  newspaper,  designated  by  the  court  or  a  judge,  pub- 
lished in  the  county  where  the  order  is  required  to  be  filed,1 
and  also  in  a  newspaper  of  every  county  in  which  the  com- 
pany has  a  business  office,  or,  if  it  have  no  business  office, 
of  the  county  in  which  its  principal  corporate  property  is 
situated,  such  paper  to  be  one  of  those  designated  to  pub- 
lish the  session  laws.2 

If  the  court  is  satisfied  that  such  application  is  made  in 
pursuance  of  a  resolution  of  the  directors  or  managers  of 
the  corporation  applying,  and  that  the  requisite  publication 
has  been  made  and  that  no  reasonable  objection  to  such  a 
change  exists,  it  will  make  an  order  authorizing  such  cor- 
poration to  assume  the  proposed  new  corporate  name. 

A  copy  of  the  order  must  be  filed  in  the  office  of  the 
secretary  of  state  and  in  the  office  of  the  clerk  of  every 
county  in  which  such  corporation  has  a  business  office,  or 
if  it  have  no  business  office,  of  the  county  in  which  its  prin- 
cipal corporate  property  is  situated,  and  it  must  also  be 
published  at  least  once  a  week  for  four  weeks  in  some  news- 
paper, to  be  designated  by  the  court,  in  such  county  or 
counties.3 

When  these  requirements  have  been  complied  with  the 
corporation  applying  for  the  change  of  name  may,  from  and 
after  the  day  specified  in  the  order  of  the  court,  be  known 
by  and  use  the  new  corporate  name  designated  in  such 
order.4 

'As    modified   by  Laws  of    1SS4,  judge  designating  both  of  the  papers 

chap.  133,  §  2.  in  which  the    notice    shall    be    pub- 

3  Laws   of    1870,   chap.    322,   §    2.  lished. 

Where  there  is  no  paper  designated  3  Id.  §  3. 

which  publishes  the  session  laws,  it  4  Id.  §  4.     From  the  language  of 

is  usual  to  obtain  an  order  from  a  the  act  it   would  seem  that  a  com- 


POWERS   AND    PRIVILEGES.  95 

No  pending  suits  or  legal  proceedings  are  affected  by 
such  change,  and  they  may  be  continued  in  the  name  in 
which  they  were  commenced,  or  they  may  upon  the  appli- 
cation of  either  party,  and  by  order  of  the  court,  be  con- 
tinued under  the  new  name  ;  and  all  obligations  of  such 
company  may  be  enforced  against  it  in  the  changed  name.' 

Same.  Banks. — A  bank,  banking  association,  or  trust  com- 
pany may  apply  at  a  special  term  of  the  supreme  court  sit- 
ting in  the  county  in  which  it  is  located,  by  a  petition  set- 
ting forth  the  grounds  of  the  application  for  an  order  author- 
izing it  to  assume  another  corporate  name. 

Such  application  must  be  approved  by  the  Superintendent 
of  the  Banking  Department,  and  notice  thereof  must  be 
published  for  four  weeks  in  two  newspapers  designated  by 
him,  one  in  the  city  of  Albany  and  the  other  in  the  county 
in  which  such  company  is  located. 

If  it  appear  to  the  satisfaction  of  the  court  that  the 
notice  has  been  so  published,  and  that  the  application  is 
made  in  pursuance  of  a  resolution  of  the  directors  or  trus- 
tees of  such  company  and  has  been  approved  by  the  Super- 
intendent of  the  Banking  Department,  and  that  there  is  no 
reasonable  objection  to  such  corporation  changing  its  name, 
it  will  make  an  order  authorizing  it  to  assume  the  proposed 
new  corporate  name. 

A  copy  of  the  order  must  be  filed  in  the  office  of  the 
Superintendent  of  the  Banking  Department  and  with  the 
clerk  of  the  county  in  which  the  corporation  is  located,  and 
be  published  at  least  once  in  each  week  for  four  successive 
weeks  in  the  newspapers  in  which  the  notice  of  application 
was  published. 

When  these  requirements  have  been  complied  with,  such 


pany  could  not  assume  its  new  name  in  some  instances  this  practice  has 

until  the  time  of  last  publication  had  not    been    followed,  and    an    earlier 

expired,  and  it  is  usual  to   insert  a  date  has  been  named, 
day  in  the  order  not  less  than  four  '  Id.  §  5. 

weeks  after  the  order  is  made  ;  but 


96  THE   LAW   OF   CORPORATIONS. 

corporation  may,  from  and  after  the  day  designated  in  the 
order,  be  known  by  and  use  the  new  corporate  name. 

Similar  provisions  in  regard  to  pending  actions,  etc.,  are 
made  as  in  the  case  of  the  change  of  names  of  the  corpora- 
tions above  given.1 

Same.  Insurance  Companies. — Unless  otherwise  provided 
in  its  charter,  a  fire  or  inland  navigation  insurance  company 
may  change  its  name,  by  altering  or  amending  its  charter 
in  this  respect,  with  the  written  consent  of  the  Superinten- 
dent of  the  Insurance  Department,  after  notice  of  such  inten- 
tion has  been  given  by  publication  for  six  weeks  in  the 
paper  in  Albany  designated  by  the  Superintendent  of  the 
Insurance  Department  for  the  publication  of  notices  relating 
to  that  department,  and  also,  in  some  newspaper  published 
in  the  county  where  such  company  is  located,  and  with  the 
written  consent  of  three  fourths  in  amount  of  its  stockhold- 
ers. 

A  copy  of  the  charter  so  amended,  together  with  a 
declaration  under  its  corporate  seal,  signed  by  the  president 
and  directors  of  such  corporation,  of  their  desire  to  change 
the  name,  together  with  the  consent  of  the  Superintendent 
of  the  Insurance  Department  and  the  consent  of  the  stock- 
holders, must  be  filed  in  the  office  of  the  Superintendent  of 
the  Insurance  Department ;  and  the  same  proceedings  must 
be  taken  in  regard  to  the  examination  of  the  charter  by  the 
attorney-general  and  certification  to  the  comptroller  as  in 
the  organization  of  such  corporations.2 

Changing  Number  of  Directors.  Manufacturing  Corporations. — 
The  number  of  trustees  of  corporations  organized  under  the 
Manufacturing  Act  may  be  increased  to  not  more  than  thir- 
teen, or  may  be  reduced  to  not  less  than  three.  The  exist- 
ing trustees  of  any  such  corporation,  or  a  majority  of  them, 
must  make  and  sign  a  certificate  declaring  how  many  trus- 

1  Laws  of  1SS7,  chap.  51S.  20S  ;  see  ante,  p.  14,  as  to  examina- 

2  Laws  of  1853,   chap.  466,  §    19,       tion  of  charter,  etc. 
as  amended  by  Laws  of  1875,  chap. 


POWERS   AND    PRIVILEGES.  97 

tees  the  corporation  shall  have  in  the  future  management 
of  its  business,  and  in  case  the  number  of  trustees  be  in- 
creased, stating  the  names  of  the  new  or  additional  trustees, 
and  in  case  the  number  be  reduced,  stating  the  number  to 
which  the  trustees  shall  be  reduced.  The  certificate  must 
be  acknowledged  by  the  trustees  signing  the  same,  or  proved 
by  a  subscribing  witness,  and-filed  in  the  office  of  the  clerk 
of  the  county  where  the  original  certificate  of  incorporation 
was  filed,  and  a  duplicate  or  transcript  thereof,  duly  certified 
under  the  official  seal  of  such  clerk,  filed  in  the  office  of  the 
secretary  of  state. 

In  case  of  an  increase  in  the  number  of  trustees,  from 
the  time  of  filing  such  certificate  and  duplicate  the  trustees 
will  be  increased  to  the  number  therein  stated,  and  the  per- 
sons so  named  in  such  certificate  will  be  trustees  until  a 
new  election  is  had. 

In  case  of  reducing  the  number  of  trustees,  the  number 
stated  in  such  certificate  will  be  the  number  of  trustees  to 
be  elected  at  the  next  election  and  thereafter,  after  filing 
such  certificate.  In  case  a  vacancy  or  vacancies  occur  in 
the  board  of  trustees  by  resignation,  or  otherwise,  after  filing 
such  certificate  and  duplicate,  and  before  the  next  election, 
no  election  shall  be  had  in  the  meantime  to  fill  such  vacancy 
or  vacancies  while  the  number  of  trustees  remaining  shall 
equal  or  exceed  the  number  to  which  the  trustees  are  reduced 
in  such  certificate.' 

Same.  Business  Act. — The  number  of  directors  of  business 
corporations  may  be  changed  to  not  less  than  three,  nor 
more  than  thirteen,  by  a  vote  of  a  majority  in  interest  of 
the  stockholders  present  in  person  or  by  attorney  duly 
authorized,  at  a  meeting  of  such  stockholders  called  pur- 
suant to  a  notice  specifying  the  purpose  of  such  meeting, 
and  given  to  each  stockholder  at  least  five  days  before  the 
time  fixed  for  such  meeting.     A  statement  of  the  change  of 

1  Laws  of  i860,  chap.  269,  §  2,  as  amended  by  Laws  of  1878,  chap.  316. 


98  THE   LAW    OF   CORPORATIONS. 

the  number  of  directors  so  made,  signed  and  verified  by  the 
president  or  a  vice-president  of  the  corporation,  and  by  the 
secretary  of  the  meeting  at  which  the  change  was  made, 
must  be  filed  in  the  office  of  the  secretary  of  state,  and  a 
copy  in  the  office  of  the  clerk  of  the  county  in  which  the 
principal  business  office  of  the  company  is  situated,  within 
ten  days  after  such  meeting.1 

Same.  Insurance  Companies. — Any  existing  life,  fire,  casu- 
alty, or  marine  insurance  company,  organized  under  the  laws 
of  this  state,  may,  by  a  vote  of  its  board  of  directors  at  a 
meeting  specially  called  for  that  purpose,  the  call  specifying 
the  object  of  the  meeting,  and  upon  a  written  notice  to  all 
of  its  stockholders  with  a  written  consent  of  a  majority  in 
amount,  reduce  the  number  of  its  directors  to  not  less  than 
thirteen,  a  majority  of  whom  must  be  citizens  of  this  state, 
by  altering  or  amending  its  charter  in  respect  to  the  number 
of  its  directors,  and  filing  a  copy  of  the  charter  so  amended, 
together  with  a  declaration  under  its  corporate  seal,  signed 
by  its  president  and  two  thirds  in  number  of  its  directors, 
with  such  written  consent  of  a  majority  of  its  stockholders, 
in  the  office  of  the  Superintendent  of  the  Insurance  Depart- 
ment. 

Such  reduction  of  the  number  of  directors  may  be  made 
so  as  to  take  effect  either  immediately  or  gradually  as  vacan- 
cies may  occur  in  the  board  of  directors  by  death,  resigna- 
tion, disqualification,  or  otherwise  ;  and  when  the  number 
of  directors  is  reduced  to  thirteen,  seven  of  such  number 
will  constitute  a  quorum  for  all  purposes.2 

Same.  Title  Guarantee  Companies. — The  number  of  direc- 
tors of  such  companies  maybe  changed  to  not  less  than  five 
nor  more  than  thirteen,  at  a  special  meeting  of  the  owners  of 
a  majority  of  the  whole  amount  of  the  capital  stock,  called 
pursuant  to  notice  specifying  the  purpose  of  such   meeting, 


1  Laws  of  1875,  chap.  611,  §  10,  as  s  Laws    of    1877,    chap.     183,    as 

amended  by  Laws  of  1890,  chap.  23.       amended  by  Laws  of  1887,  chap.  650. 


POWERS    AND    PRIVILEGES. 


99 


and  served  on  such  stockholders  by  mail  at  least  five  days 
before  such  meeting.  A  vote  of  a  majority  of  the  stock- 
holders in  person  or  by  attorney  duly  authorized  for  that 
purpose  is  necessary  to  effect  such  a  change.  A  majority 
of  the  whole  number  of  directors  is  necessary  to  constitute 
a  quorum.1 

1  Laws  of  1SS5,  chap.  538,  §  9. 


IOO  THE   LAW    OF   CORPORATIONS. 


CHAPTER   III. 
THE  CAPITAL  STOCK. 

THE  capital  stock  of  a  corporation  is,  generally  speaking, 
the  amount  fixed  by  its  charter  to  be  contributed  by  the 
stockholders  as  the  fund  to  be  used  in  the  prosecution  of  its 
business; '  and  there  is  no  more  justification  for  fixing  such 
capital  at  a  fictitious  and  exhorbitant  valuation  than  for  an 
individual  or  firm  doing  business  to  misrepresent  the  amount 
of  his  or  its  capital. 

Persons  dealing  with  a  corporation  have  a  right  to  assume 
that  its  nominal  capital  represents  actual  and  not  fictitious 
value  ;a  and  where  the  capital  is  paid  up  in  cash  such  is  the 
fact.  But  man}'  corporations  are  organized  with  a  capital 
issued  for  property,  and,  unless  it  is  expressly  prohibited,  an 
issue  for  property,  at  a  fair  and  reasonable  valuation,  is  not 
only  legal,  but  in  many  cases  is  the  safest  and  most  con- 
venient method.3 

Stock  issued  for  Property. — Persons  may  enter  into  an  agree- 
ment to  form  a  corporation,  and  they  may  provide  how  and 
in  what  manner  property  shall  be  transferred  to  the  cor- 
poration and  the  value  to  be  placed  upon  it,  and  such  a  con- 
tract will  be  sustained  if  there  is  no  evidence  that  it  is  an 
attempt  to  evade  the  statute  or  to  defraud  the  public  by 
putting  a  valueless  stock  on  the  market  at  an  excessive 
valuation.4     And   where   one   has  contributed   property   as 

1  Barry  v.  Merchants'  Exchange  Colt  v.  J 'an  Brunt,  82  id.  535;  Blake 
Co.,  1  Sandf.  Chan.  280-  Bur  rail  v.  v.  Griswold,  103  id.  429.  See  Chap. 
Bushwick  R.   R.    Co.,  75  N.  Y.  211;       VII.  post. 

Williams  v.  Western  Union  Tel.  Co.,  3  Van  Cott  v.  Van  Brunt.  82  N.  Y. 

03  id.  162.  535 ;  Lake  Superior  Iron  Co.  v.  Drexel, 

2  Sagory  v.  Dubois,  3  Sandf.  Chan.       90  id.  87. 

466;  Boynton  v.  Hatch,  47  N.  Y.  225;  4  Lorillard  v.  Clyde,  86  N.  Y.  384. 

Boynton  v.  Andrews,  63  id.  93;    Van 


THE   CAPITAL   STOCK.  101 

payment  for  a  subscription  to  the  stock  of  a  corporation, 
such  property  will  pass  to  the  corporation  upon  its  organiza- 
tion without  a  formal  transfer.1 

While  allowance  is  made  for  the  difference  of  opinion  as 
to  the  value  of  property  for  which  stock  maybe  issued,  and 
even  for  the  sanguine  expectations  of  those  interested  in 
property  like  patent  rights,  or  mining  property,  whose  rea- 
sonable value  depends  upon  many  contingencies  and  which 
is  difficult  of  estimation,  yet,  as  we  shall  see  in  another 
chapter,  in  order  to  escape  liability  there  must  be  a  fair  and 
honest  attempt  to  appraise  such  property  at  a  fair  valua- 
tion.2 

Under  the  Manufacturing  Act. — This  act  as  originally  passed 
provided  that  nothing  but  money  should  be  considered  as 
payment  of  any  part  of  the  capital  stock  ; 3  but  subsequently 
the  act  was  so  amended  as  to  provide  that  the  trustees  of 
such  a  company  might  purchase  mines,  manufactories  and 
other  property  necessary  for  their  business,  and  issue  stock 
to  the  amount  of  the  value  thereof  in  payment  therefor,  and 
that  the  stock  so  issued  should  be  declared  and  taken  to 
be  full  stock  and  not  liable  to  any  further  calls/ 

The  trustees  are  the  sole  judges  of  the  necessity  of  such 
a  purchase,  and  of  the  value  of  such  property  if  it  is  pur- 
chased by  them  in  good  faith,  and  not  as  an  evasion  of  the 
provision  that  the  stock  maybe  issued  to  the  amount  of  the 
value  of  such  property/ 

Under  the  Business  Act. — This  act  provides  that  no  cor- 
poration organized  under  it  shall  issue  either  stock  or  bonds 
except  for  money,  labor  done,  or  property  actually  received 
for  the  use  and  legitimate  purposes  of  such  corporation  at 
its  fair  value,  and  all  fictitious  increase  of  stock  or  indebted- 
ness in  any  form  shall  be  void.6 

1  American  Silk  Works  v.  Salomon,  4  Laws  of  1853,  chap.  333,  =;  2. 

6  T.  &  C.  352.  B  Schenck   v.    Andrews,    57    X.  Y. 

2  Chapters  V.  and  VII.  133. 

3  Laws  of  1848,  chap.  40,  £  14.  6  Laws  of  1S75,  chap.  6u,  §  14. 


102  THE   LAW    OF  CORPORATIONS. 

Title  Guaranty  Companies. — The  act  for  the  incorporation 
of  companies  to  examine  and  guarantee  bonds  and  mort- 
gages and  titles  to  real  estate  contains  a  provision  essentially 
the  same  as  that  contained  in  the  Business  Act.1 

Miscellaneous  Companies. — As  we  have  seen  in  the  previous 
chapters  it  is  required  of  certain  corporations,  as  a  condition 
of  granting  a  certificate  of  organization,  that  an  affidavit  of 
the  payment  of  the  whole  or  a  portion  of  the  capital  stock 
be  first  filed.  When  this  is  required  it  is  a  condition  prec- 
edent of  the  organization  which  must*  be  complied  with 
before  the  organization  can  be  perfected. 

Preferred  Stock. — The  right  of  a  corporation  to  issue  pre- 
ferred stock,  unless  expressly  authorized  so  to  do  by  its 
charter,  is  one  that  will  not  be  implied.  And  even  where 
a  meeting  is  called  for  that  purpose  and  all  of  the  stock- 
holders present  vote  to  issue  such  stock,  yet  its  issue  will  be 
enjoined  on  the  application  of  a  dissenting  stockholder.2 

It  is  not  uncommon,  however,  for  corporations  in  this 
state  to  issue  preferred  stock  without  authority  being  con- 
ferred by  their  charters,  and  under  the  present  practice  at 
the  office  of  the  secretary  of  state  it  can  only  be  issued  in 
such  a  manner  in  the  greater  number  of  cases  ; 3  and  such  an 
issue,  if  provided  for  in  the  by-laws  at  the  time  of  organiza- 
tion of  a  corporation,  would  undoubtedly  be  sustained. 

Kent  v.  The  Quicksilver  Mining  Co.,"  is  the  leading  case 
in  this  state  on  the  issue  of  preferred  stock,  and  in  that  case 
Judge  Folger  in  giving  the  opinion  of  the  court  thus  clearly 
states  what  is  undoubtedly  the  law  in  relation  to  the  issue 

1  Laws  of  1885,  chap.  538,  §  12.  3-     This   would   seem   to   authorize 

2  Kent  v.  Quicksilver  Mining  Co.,  different  kinds  of  stock  such  as  com- 
12  Hun,  53;  aff'd,  7S  N.  Y.  159.  mon    and    preferred;  but  certificates 

3  The  Business  Act  provides  that  containing  such  descriptions  of  stock 
the  certificate  of  incorporation  shall  are  not,  at  present,  filed  in  the  office 
state    among      other     things     "the  of  the  secretary  of  state. 

amount  and  description  of  the  capital  4  78  N.  Y.  159. 

stock."     Laws  of   1S75,  chap.  6n,  § 


THE   CAPITAL   STOCK.  IO3 

of  preferred  stock  where  it   is  not  expressly  authorizad  by 
the  charter  of  a  corporation. 

"  We  are  not  prepared  to  say  that  at  the  first  the  cor- 
poration might  not  have  lawfully  divided  the  interest  in  its 
capital  stock  into  shares  arranged  in  classes,  preferring  one 
class  to  another  in  the  right  it  should  have  in  the  profits  of 
the  business.  The  charter  gave  power  to  make  such  by-laws 
as  it  might  deem  proper,  consistent  with  constitution  and 
law  ;  and  to  issue  certificates  of  stock  representing  the  value 
of  the  property.  We  know  nothing  in  the  constitution  or  the 
law  that  inhibits  a  corporation  from  beginning  its  corporate 
action  by  classifying  the  shares  in  its  capital  stock,  with 
peculiar  privileges  to  one  share  over  another,  and  thus  offer- 
ing its  stock  to  the  public  for  subscriptions  thereto.  No 
rights  are  got  until  a  subscription  is  made.  Each  subscriber 
would  know  for  what  class  of  stock  he  put  down  his  name, 
and  what  right  he  got  when  he  thus  became  a  stockholder. 
There  need  be  no  deception  or  mistake  ;  there  would  be  no 
trenching  upon  rights  previously  acquired.  No  contract, 
express  or  implied,  would  be  broken  or  impaired." 

This  case  came  before  the  Court  of  Appeals  on  three 
appeals  from  judgments  of  the  Supreme  Court;3  the  one 
restraining  the  company  from  converting  the  common  stock 
into  preferred  stock  ;  the  second  decreeing  a  distribution  of 
the  earnings  of  the  company  between  the  existing  pre- 
ferred stockholders  and  the  common  stockholders,  giving 
the  preferred  stockholders  such  a  preference  as  their  stock 
called  for.  The  third  was  from  a  judgment  dismissing  the 
complaint  in  an  action  brought  to  restrain  the  company  from 
paying  the  holders  of  the  preferred  stock  any  interest  or 
dividends  in  excess  of  dividends  paid  on  the  common  stock, 
and  to  have  the  preferred  stock  already  issued  declared 
illegal.  These  judgments  were  all  affirmed,  the  preferred 
stock  already  issued  being  declared  legal  and  entitled  to  the 

1  Reported  below,  12  Hun,  53;   17  Hun,  169. 


I04  THE   LAW   OF   CORPORATIONS. 

preference  it  purported  to  give,  although  the  further  issue 
was  restrained. 

The  charter,  in  addition  to  the  usual  provisions  in  regard 
to  by-laws,  etc.,  provided  that  the  company  should  have 
power  "  to  issue  certificates  of  stock  ;  representing  the  value 
of  their  property  in  such  form,  and  subject  to  such  regula- 
tions as  they  may  from  time  to  time  by  their  by-laws  pre- 
scribe." It  was  contended  by  counsel  for  certain  of  the 
preferred  stockholders  that  the  company  was  authorized  by- 
its  charter  to  create  preferred  stock,  and  that  the  act  was  not 
impaired  by  originally  issuing  common  stock  only.  But 
this  point  was  determined  adversely  by  the  court  which  in 
its  opinion  further  says  :' 

"  We  are  therefore  of  the  opinion  that  there  was  no 
power  in  the  corporate  body,  nor  in  a  majority  of  the  stock- 
holders to  provide  by  by-law  for  the  creation  of  a  preferred 
stock  so  as  to  bind  a  minority  of  the  stockholders  not  assent- 
ing thereto." 

The  judgments  as  above  stated  were  sustained  so  far  as 
the  legality  of  the  preferred  stock  already  issued  was  con- 
cerned solely  and  expressly  on  the  ground  of  indefensible 
laches  and  estoppel  on  the  part  of  those  who  subsequently 
objected  to  its  issue  ;  and  the  further  issue  of  preferred  stock 
was  enjoined  on  the  ground  of  want  of  authority  in  the  cor- 
poration to  make  it. 

On  the  same  ground  of  estoppel  this  case  would  un- 
doubtedly be  authority  to  sustain  the  issue  of  preferred  stock, 
if  provided  for  in  the  by-laws,  and  made  at  the  outset  of 
the  organization,  and  with  the  knowledge  of  all  subscribers. 

Change  of  Preferred  for  Common  Stock. — Any  corporation 
organized  under  the  laws  of  this  state  which  has,  or  which 
may,  issue  both  preferred  and  common  stock,  forming  part 
of  the  capital  stock  of  such  corporation,  is  authorized,  when- 
ever the  directors  of  such  corporation  may  by  vote   of  two 

1  Page  1S3. 


THE    CAPITAL   STOCK.  105 

thirds  of  their  number  declare  it  for  the  interest  of  the  cor- 
poration so  to  do,  and  the  holder  of  any  such  preferred  stock 
may  request  in  writing  the  exchange  of  the  same  for  the 
common  stock,  to  exchange  the  preferred  stock  of  such 
holder  for  common  stock,  and  to  issue  certificates  of  common 
stock  therefor,  share  for  share,  or  upon  such  other  valuation 
as  may  have  been  agreed  upon  in  the  scheme  for  organiza- 
tion of  such  company  or  the  issue  of  such  preferred  stock.  It 
is  provided,  however,  that  the  total  amount  of  the  capital  stock 
of  such  company  shall  not  be  increased  by  such  transfer.1 

INCREASING   AND    DECREASING   CAPITAL   STOCK. 

A  corporation  has  no  implied  power  to  increase  or 
diminish  its  capital  stock,  and  it  can  be  changed  only  as 
authorized  by  the  legislature.2  The  Revised  Statutes  ex- 
pressly provide  that  it  shall  not  be  lawful  for  the  directors 
or  managers  of  any  incorporated  company  in  this  state  to 
reduce  its  capital  stock  without  such  consent.3 

Reducing  Capital  Stock. — By  a  general  act  passed  May  1 5th, 
1878,  any  corporation  organized  under  a  general  or  special 
law  of  this  state  was  authorized  to  diminish  its  capital  stock, 
by  complying  with  the  provisions  of  the  act,  to  any  amount 
deemed  sufficient  and  proper  for  the  purposes  of  the  cor- 
poration. It  was  provided  that  no  holder  or  owner  of  stock 
in  such  corporation  should  be  relieved  by  such  reduction 
from  any  liability  existing  prior  thereto,  and  it  was  also 
provided  that  the  act  should  in  no  way  interfere  with  or 
affect  any  law  then  in  existence  authorizing  any  corporation 
previously  organized  to  reduce  its  capital  stock." 

The  act  provides  that  whenever  any  company  shall  desire 
to  call  a  meeting  for  the  purpose  of  diminishing  the  amount 
of  its  capital  stock,  it  shall  be  the  duty  of  the  trustees  or 
directors  to  publish  a  notice  signed  by  at  least  a  majority  of 

1  Laws  of  18S0,  chap.  225,  §  I.  title  4,  §  2. 

2  Sutherland  v.  Okott,  95  N.  Y*.  93.  4  Laws  of  1S7S,  chap.  204,  §  I. 

3  Rev.   Stat,   part  1.,  chap,  xviii., 


to6  THE   LAW   OF   CORPORATIONS. 

them  in  a  newspaper  in  the  county  in  which  the  business  of 
the  company  is  carried  on,  or  its  principal  office  is  located, 
if  any,  at  least  three  successive  weeks,  and  to  deposit  a 
written  or  printed  copy  thereof  in  the  post-office,  addressed 
to  each  stockholder  at  his  usual  place  of  residence  at  least 
three  weeks  previous  to  the  day  fixed  upon  for  holding  such 
meeting,  specifying  the  object  of  the  meeting,  the  time 
when  and  place  where  it  shall  be  held,  and  the  amount  to 
which  it  is  proposed  to  reduce  the  capital ;  and  a  vote  of  at 
least  two  thirds  of  all  the  shares  of  stock  are  necessary  to 
the  diminution  of  the  capital.1 

If  at  the  time  and  place  specified  in  such  notice  stock- 
holders appear  in  person  or  by  proxy  in  numbers  represent- 
ing not  less  than  two  thirds  of  all  the  shares  of  stock  of  the 
corporation,  they  may  organize  by  choosing  one  of  the  trus- 
tees chairman  of  the  meeting  and  a  suitable  person  for  sec- 
retary, and  proceed  to  a  vote  of  those  present  in  person  or 
by  proxy;  and  if,  in  canvassing  the  votes,  it  is  found  that  a 
sufficient  number  of  votes  has  been  given  in  favor  of  dimin- 
ishing the  amount  of  capital,  a  certificate  of  the  proceedings 
showing  a  compliance  with  the  provisions  of  the  act,  the 
amount  ^*  capital  actually  paid  in,  the  whole  amount  of 
debts  and  liabilities  of  the  company,  and  the  amount  to  which 
the  capital  stock  shall  be  diminished  must  be  made,  signed 
and  verified  by  the  chairman,  and  such  certificate  must  be 
acknowledged  by  the  chairman  and  filed  in  the  office  of  the 
clerk  of  the  county  in  which  the  business  of  the  company  is 
carried  on,  and  a  duplicate  in  the  office  of  the  secretary  of 
state,  with  the  approval  of  the  comptroller  indorsed  thereon, 
to  the  effect  that  the  reduced  capital  is  sufficient  for  the 
proper  purposes  of  the  company,  and  is  in  excess  of  all 
debts  and  liabilities  of  the  company,  exclusive  of  debts 
secured  by  trust  mortgages,  and  that  the  actual  market 
value  of  the  stock  of  the  company,  prior  to  the  reduction, 

1  Laws  of  1878,  chap.  264,  §  2. 


THE   CAPITAL   STOCK.  107 

was  less  than  the  par  value  of  the  same,  and  when  so  filed 
the  capital  stock  of  such  corporation  shall  be  reduced  to  the 
amount  specified  in  the  certificate. 

The  amount  of  capital  left  in  the  possession  of  the  com- 
pany over  and  above  the  amount  to  which  the  capital  is 
reduced  must  be  returned  to  the  stockholders,/™  rata,  at 
such  times  and  in  such  manner  as  the  trustees  or  directors 
may  determine.' 

In  order  to  enable  the  comptroller  to  indorse  his  approval 
on  such  a  certificate,  an  affidavit  that  the  proposed  capital 
is  sufficient  for  the  proper  purposes  of  the  company,  and 
that  the  actual  market  value  of  the  stock  prior  to  the  reduc- 
tion was  less  than  the  par  value  of  the  same,  must  be  made 
and  attached  to  the  certificate. 

Any  corporation  organized  since  the  passage  of  this  act 
(May  15th,  1878)  can  reduce  its  capital  stock  only  in  the  man- 
ner therein  provided,  as  it  has  been  held  to  repeal  by  impli- 
cation all  former  provisions  in  regard  to  the  reduction  of 
capital,  and  to  furnish  the  only  law  upon  the  subject.8 

It  will  be  particularly  noticed  that  the  act  contains  two 
important  provisions,  viz.,  that  under  this  act  the  capital 
can  be  reduced  only  when  the  actual  market  value  of  stock 
of  the  company  prior  to  the  reduction  is  less  than  the  par 
value  of  the  same ;  and,  secondly,  that  any  corporation 
organized  prior  to  the  passage  of  the  act  may  continue  to 
avail  itself  of  any  law  then  existing  authorizing  it  to  reduce 
its  capital. 

The  special  provisions  which  the  above  act  supplants  are 
generally  contained  in  acts  of  incorporation  of  different 
classes  of  companies,  and  are  usually  simpler  in  their  pro- 
visions and  less  elaborate  than  the  one  above.  They  will 
be  considered  in  a  later  part  of  this  chapter. 

1  Laws  of  1878,  chap.  264,  §  3,  as       cam  Co.  v.  Carr,  36  Hun,  488  ;  aff'd 
amended  by  Laws  of  18S2,  chap.  306.       on  opinion  of  court  below,  100  N.  Y. 

2  People  ex  rel.  Eden  Musc'e  Avieri-       641. 


I08  THE    LAW    OF    CORPORATIONS. 

Increasing  Capital  Stock. — In  1872  a  general  act  in  relation 
to  increasing  the  capital  stock  of  corporations  was  passed.1 

It  provided  that  any  corporation  formed  under  the  laws 
of  this  state,  excepting  banks,  banking  associations,  trust 
companies,  life,  health,  accident,  marine  and  fire  insurance 
companies,  railroad  and  navigation  and  gas  companies, 
might  increase  its  capital  stock  as  provided  by  section  twen- 
tieth of  the  Manufacturing  Act.  It  was  provided,  however, 
that  the  act  should  not  apply  to  corporations  created  by 
special  act  of  incorporation,  the  capital  stock  of  which  origi- 
nally exceeded  two  hundred  thousand  dollars,  and  that  such 
increase  should  not  exceed  in  the  aggregate  the  amount  of 
capital  stock  specified  in  the  act  of  incorporation.  And  it 
was  also  provided  that  any  corporation,  the  capital  of  which 
should  be  increased  under  the  provisions  of  the  act,  and  its 
stockholders  should  be  subject  to  all  the  liabilities  as  regards 
such  additional  capital  as  is  provided  in  the  original  act  or 
charter  in  relation  to  its  capital." 

The  provisions  of  the  Manufacturing  Act  in  regard  to 
the  increase  of  capital  stock  apply  also  to  diminishing  stock 
and  to  changing  the  business  of  such  companies-  In  regard 
to  diminishing  stock,  as  we  have  seen,3  it  applies  only  to 
corporations  organized  under  the  act  prior  to  the  15th  of 
May,  1878.  And,  e  converse,  the  provisions  in  regard  to  the 
increase  of  stock  would  probably  be  held  to  be  the  only 
ones  applicable  to  corporations  organized  subsequent  to  the 
adoption  of  chapter  611  of  Laws  of  1872,  except  those 
expressly  omitted  from  its  provisions. 

The  sections  applicable  to  this  subject  are  as  follows  : 

Any  corporation  or  company  heretofore  formed,  either 
by  special  act  or  under  the  general  law,  and  now  existing  for 
any  manufacturing,  mining,  mechanical  or  chemical  pur- 
poses, or  any  company  which  may  be  formed  under  this  act, 
may  increase  or  diminish  its  capital  stock  by  complying  with 

1  Laws  of  1872,  chap.  611.  3  Ante,  p.  107, 

3  Id.  §  1. 


THE   CAPITAL   STOCK.  IO9 

the  provisions  of  this  act,  to  any  amount  which  may  be 
deemed  sufficient  and  proper  for  the  purposes  of  the  corpo- 
ration, and  may  also  extend  its  business  to  any  other  manu- 
facturing, mining,  mechanical  or  chemical  business,  subject 
to  the  provisions  and  liabilities  of  this  act.  But  before  any 
corporation  shall  be  entitled  to  diminish  the  amount  of  its 
capital  stock,  if  the  amount  of  its  debts  and  liabilities  shall 
exceed  the  amount  of  capital  to  which  it  is  proposed  to  be 
reduced,  such  amount  of  debts  and  liabilities  shall  be  satisfied 
and  reduced  so  as  not  to  exceed  such  diminished  amount  of 
capital ;  and  any  existing  company,  heretofore  formed  under 
the  general  law,  or  any  special  act,  may  come  under  and 
avail  itself  of  the  privileges  and  provisions  of  this  act,  by 
complying  with  the  following  provisions,  and  thereupon 
such  company,  its  officers  and  stockholders,  shall  be  subject. 
to  all  the  restrictions,  duties,  and  liabilities  of  this  act.' 

Whenever  any  company  shall  desire  to  call  a  meeting 
of  the  stockholders,  for  the  purpose  of  availing  itself  of  the 
privileges  and  provisions  of  this  act,  or  for  increasing  or 
diminishing  the  amount  of  its  capital  stock,  or  for  extending 
or  changing  its  business,  it  shall  be  the  duty  of  the  trustees 
to  publish  a  notice  signed  by  at  least  a  majority  of  them,  in 
a  newspaper  in  the  county,  if  any  shall  be  published  therein, 
at  least  three  successive  weeks,  and  to  deposit  a  written  or 
printed  copy  thereof  in  the  post-office,  addressed  to  each 
stockholder  at  his  usual  place  of  residence,  at  least  three 
weeks  previous  to  the  day  fixed  upon  for  holding  such  meet- 
ing, specifying  the  object  of  the  meeting,  the  time  and  place 
when  and  where  such  meeting  shall  be  held,  and  the  amount 
to  which  it  shall  be  proposed  to  increase  or  diminish  the 
capital,  and  the  business  to  which  the  company  would  be 
extended  or  changed,  and  a  vote  of  at  least  two-thirds  of  all 
the  shares  of  stock  shall  be  necessary  to  an  increase  or  dimi- 
nution of  the  amount  of  its  capital  stock,  or  the  extension  or 

1  Laws  of  184S,  chap.  40.  S  20. 


HO  THE   LAW   OF   CORPORATIONS. 

change  of  its  business  as  aforesaid,  or  to  enable  a  company 
to  avail  itself  of  the  provisions  of  this  act.1 

If,  at  any  time  and  place  specified  in  the  notice  provided 
for  in  the  preceding  section  of  this  act,  stockholders  shall 
appear  in  person  or  by  proxy,  in  number  representing  not 
less  than  two-thirds  of  all  the  shares  of  stock  of  the  cor- 
poration, they  shall  organize  by  choosing  one  of  the  trustees 
chairman  of  the  meeting,  and  also  a  suitable  person  for  sec- 
retary, and  proceed  to  a  vote  of  those  present,  in  person  or 
by  proxy,  and  if  on  canvassing  the  votes  it  shall  appear  that 
a  sufficient  number  of  votes  has  been  given  in  favor  of  in- 
creasing or  diminishing  the  amount  of  capital,  or  of  extend- 
ing or  changing  its  business  as  aforesaid,  or  for  availing  itself 
of  the  privileges  and  provisions  of  this  act,  a  certificate  of 
the  proceeding  showing  a  compliance  with  the  provisions  of 
this  act,  the  amount  of  capital  actually  paid  in,  the  business 
to  which  it  is  extended  or  changed,  the  whole  amount  of 
debts  and  liabilities  of  the  company,  and  the  amount  to 
which  the  capital  stock  shall  be  increased  or  diminished, 
shall  be  made  out,  signed  and  verified  by  the  affidavit  of  the 
chairman,  and  be  countersigned  by  the  secretary,  and  such 
certificate  shall  be  acknowledged  by  the  chairman,  and  filed 
as  required  by  the  first  section  of  this  act,  and  when  so  filed, 
the  capital  stock  of  such  corporation  shall  be  increased  or 
diminished,  to  the  amount  specified  in  such  certificate,  and 
the  business  extended  or  changed  as  aforesaid,  and  the  com- 
pany shall  be  entitled  to  the  privileges  and  provisions,  and 
be  subject  to  the  liabilities  of  this  act,  as  the  case  maybe.* 

Increase  and  Decrease  of  Capital  Stock :  Gas-Light  Companies  and 
Navigation  Companies. — The  acts  for  the  incorporation  of  gas- 
light   companies,3  and  navigation,1  and  inland    navigation5 

1  Laws  of  1848,  chap.  40,  §  21.  4  Laws  of  1852,  chap.  228,  §§  II- 

8  Id.  §  22.  14. 

3  Laws  of  1S4S,  chap.  37,  §§  20-22,  b  Laws  of  1854,  chap.  232,  §§  19- 

as  amended  by  Laws  of  1S75,  chap.  21. 
120. 


THE    CAPITAL    STOCK.  Ill 

companies  contain  substantially  the  same  provisions  in  re- 
gard to  increasing  and  diminishing  capital  stock  as  those  of 
the  Manufacturing  Act. 

Decreasing  Capital  Stock  of  Insurance  Companies.— When  it 
shall  appear  to  the  Superintendent  of  the  Insurance  Depart- 
ment from  an  examination  made  by  him  in  the  manner  pre- 
scribed by  law,  that  the  capital  stock  of  any  joint-stock  fire  or 
marine  insurance  company,  organized  pursuant  to  law,  is  im- 
paired to  an  amount  exceeding  twenty-five  per  centum  of  such 
capital ;  or  whenever,  for  any  reason,  three-fourths  of  the  direc- 
tors of  such  a  company  (with  the  consent  of  at  least  one-half 
of  the  stockholders  owning  not  less  than  two-thirds  of  the 
capital  stock)  shall  desire  to  reduce  the  amount  of  its  capital 
stock,  and  the  Superintendent  of  the  Insurance  Department 
is  of  the  opinion  that  the  interests  of  the  public  will  not  be 
prejudiced  by  permitting  such  company  to  continue  business 
with  a  reduced  capital,  such  company,  with  the  permission 
of  the  Superintendent,  may  reduce  its  capital  and  the  par 
value  of  its  shares  to  such  amount  as  the  Superintendent 
may,  under  his  hand  and  official  seal,  certify  to  be  proper, 
and  as  shall,  in  his  opinion,  be  justified  by  the  assets  and 
property  of  such  company. 

No  part  of  such  assets  may  be  distributed  to  the  stock- 
holders ;  and  it  is  also  provided  that  the  capital  stock  of  any 
such  company  shall  not  be  reduced  to  an  amount  less  than 
the  sum  now  required  by  law  for  the  organization  of  a  new 
company,  under  the  general  insurance  laws  for  the  transac- 
tion of  business  at  the  place  where  such  company  is  located, 
and  of  the  kind  which  such  company  is  authorized  to 
transact. 

When  any  capital  is  reduced  by  this  act  all  amounts  added 
to  the  surplus  account  thereby  must  be  held  as  a  reserve  for 
the  protection  of  policy-holders,  and  may  not  be  used  in  the 
payment  of  dividends  to  stockholders.1 

1  Laws  of   1867,  chap.  91,  §  1,  as       327,  §  r.  Lawsof  1SS5,  chap.  327.  ,%'  2, 
amended    by    Laws    of    18S5,    chap.       repeals  all  acts  or  parts  of   acts    in- 


112  THE   LAW   OF  CORPORATIONS. 

No  reduction  of  the  capital  of  any  such  company  shall  be 
made  except  by  a  resolution  of  its  board  of  directors,  certi- 
fied under  its  corporate  seal,  and  signed  by  the  president  and 
at  least  two-thirds  of  its  directors,  and  proved  or  acknowl- 
edged in  the  manner  required  for  the  proof  or  acknowledg- 
ment of  conveyances,  and  that  such  certificate  shall  be  filed 
in  the  office  of  the  Superintendent  of  the  Insurance  Depart- 
ment.1 

In  case  the  Superintendent  permits  such  reduction,  he 
will  execute  certificates  in  duplicate,  and  deliver  one  to  the 
officers  of  the  company,  who  must  forthwith  file  the  same 
with  the  clerk  of  the  county  in  which  such  company  is 
located,  and  the  other  will  be  filed  in  the  office  of  the  Super- 
intendent.2 

Upon  filing  such  certificate  with  the  county  clerk,  such 
company,  with  such  reduced  capital,  will  possess  the  same 
rights  and  be  subject  to  the  same  liabilities  that  it  possessed 
or  was  subject  to  at  the  time  of  the  reduction  of  its  capital, 
and  the  charter  of  such  company  will  be  deemed  to  be 
amended  in  respect  to  the  amount  of  capital  and  the  par 
value  of  the  shares  so  as  to  conform  to  such  reduction.3 

The  company  may  require  the  return  of  the  original 
certificate  of  stock,  held  by  each  stockholder,  and  in  lieu 
thereof  issue  new  certificates  for  such  number  of  shares  as 
such  stockholder  may  be  entitled  to,  in  the  proportion  that 
the  reduced  capital  may  be  found  to  bear  to  the  original 
capital  of  the  company,4 

May  Increase  its  Capital  Stock. — Any  company  having  SO 
reduced  its  capital  may  increase  it  in  the  mode  prescribed  by 
the  nineteenth  section  of  chapter  four  hundred  and  sixty-six 
of  the  Laws  of  1853/ 

consistent  with  this  act,  and  it  would  seem  in  some  points  to  be  supersed- 

accordingly  supersede  Laws  of  1S7S,  ed  by  section  1  as  amended, 
chap.  264,  as  regards  fire  and  marine  3  Id.  §  4. 

insurance  companies.  4  Id.  ^  5. 

1  Laws  of  iS67,  chap.  91,  §  2.  6  Id.  §  6. 

2  Id.  §  3.      Sections  2  and  3  would 


THE    CAPITAL    STOCK.  113 

That  section  provided  that  any  existing  fire-insurance 
company,  or  any  company  formed  under  that  act,  might  at 
any  time,  with  the  written  consent  of  the  Superintendent  of 
the  Insurance  Department,  increase  the  amount  of  its  capital 
stock,  after  notice  given  once  a  week  for  six  weeks  in  the  state 
paper,  and  in  any  newspaper  published  in  the  county  where 
such  company  was  located,  of  such  intentions,  with  the 
written  consent  of  three-fourths  in  amount  of  its  stockholders, 
unless  otherwise  provided  in  its  charter,  by  altering  or 
amending  its  charter  in  this  respect,  and  filing  such  consent, 
a  copy  of  its  charter  so  amended,  together  with  a  declaration 
under  its  corporate  seal,  signed  by  its  president  and  direc- 
tors, of  their  desire  so  to  do,  with  the  written  consent  of 
three-fourths  in  amount  of  its  stockholders  to  such  increase 
in  the  office  of  the  Superintendent. 

The  same  requirements  must  be  complied  with  in  regard 
to  the  examination  of  the  charter  and  proofs  of  publication 
by  the  attorney-general  and  certification  by  him  as  in  the 
organization  of  a  company.1 

The  above  provisions  as  to  the  increase  of  capital  stock 
are  extended  to  any  existing  company  incorporated  by  or 
authorized  under  the  laws  of  this  state,  or  to  any  company 
formed  under  that  law  to  transact  the  business  embraced  in 
the  second  department  of  section  one  of  the  act  to  provide' 
for  the  incorporation  of  a  life  and  health  and  casualty  insur- 
ance companies.2 

Increase  of  Capital  Stock  by  Credit  Guaranty  Companies. — Any 
company  formed  under  the  act  for  the  incorporation  of 
credit  guaranty  and  indemnity  companies  may  at  any  time 
increase  the  amount  of  its  capital  stock,  after  notice  pub- 
lished once  a  week  for  six  weeks  successively  in  two  news- 
papers published  in  the  county  where  such  company  is 
located,  of  such  intentions,  with  the  written  consent  of  three- 

1  Laws  of  1S53,  chap.  466,  §  19,  as  2  Laws  of  1S53,  chap.  463,  §  21,  as 

amended    by    Laws    of    1S75,    chap.       amended    by   Laws    of    1SS0,   chap. 
208.  427.      See  ante,  p.    15. 


114  THE   LAW    OF   CORPORATIONS. 

fourths  in  amount  of  its  stockholders,  unless  otherwise  pro- 
vided in  its  charter,  by  altering  or  amending  its  charter  in 
this  respect,  and  filing  a  copy  of  the  charter,  so  amended 
together  with  a  declaration  under  its  corporate  seal,  signed 
by  its  president  and  directors,  of  their  desire  so  to  do,  with 
the  consent  of  the  stockholders  to  such  increase,  in  the  office 
of  the  Superintendent  of  the  Insurance  Department.1 

Increase  or  Decrease  of  Capital  Stock  by  Title  Guaranty  Com- 
panies.— The  capital  stock  of  any  corporation  organized  under 
the  act  to  provide  for  the  organization  and  regulation  of  cor- 
porations to  examine  and  guaranty  bonds  and  mortgages 
and  titles  to  real  estate  may  be  increased  to  an  amount  not 
to  exceed  one  million  dollars,  or  reduced  not  below  one 
hundred  and  fifty  thousand  dollars,  by  a  vote  of  the  majority 
of  the  stockholders  in  number,  and  representing  a  majority 
of  the  capital  stock  of  such  corporation  at  any  meeting,  con- 
vened for  that  purpose,  pursuant  to  a  notice  specifying  the 
object  of  such  meeting,  and  served  upon  each  stockholder  by 
depositing  in  the  post-office,  properly  addressed  to  his  last 
known  place  of  residence,  postage  prepaid,  at  least  five  days 
before  the  time  of  such  meeting. 

A  statement  of  such  increase  or  reduction  must  be  filed 
in  the  office  of  the  Superintendent  of  the  Insurance  Depart- 
ment and  of  the  clerk  of  the  county  in  which  the  principal 
business  office  of  such  corporation  is  situated,  within  ten  days 
after  such  action.8 

Reduction  of  Capital  Stock  by  Banks. — Any  banking  associa- 
tion organized  under  the  general  banking  laws  of  this  state 
may  reduce  its  capital  stock  to  an  amount  which  shall  be 
equal  to  its  property  and  effects  above  and  beyond  all  its 
debts  and  liabilities,  and  the  par  value  of  its  shares  shall  be 
reduced  in  the  same  proportion  ;  but  in  no  case  may  the 
capital  be  reduced  below  the  amount  required  by  law.3 

1  Laws  of  1886,  chap.  611,  §  12.  as  amended  by  Laws  of  1886,  chap. 

2  Laws  of  1885,  chap.  538,  §  13.  575. 

3  Laws  of    1882,  chap.  409,  §  41, 


THE   CAPITAL   STOCK.  1 1  5 

Notice  of  such  intention  must  be  given  to  the  Superin- 
tendent of  the  Banking  Department,  in  writing,  signed  by  a 
majority  of  its  board  of  directors,  and  accompanied  by  the 
written  assent  to  such  reduction  of  at  least  two-thirds  in 
amount  of  the  shareholders.1 

Upon  filing  such  notice  the  Superintendent  of  the  Bank- 
ing Department  will  make  an  examination  of  the  books, 
property,  effects  and  liabilities  of  such  banking  association, 
and  from  the  result  thereof  determine  and  certify  the  reduced 
amount  of  capital  stock.8 

The  determination  and  certificate  in  writing  so  made  of 
the  amount  to  which  the  capital  stock  has  been  reduced  must 
be  recorded  in  the  office  of  the  clerk  of  the  county  in  which 
such  bank  is  located,  and  a  certified  copy  filed  in  the  Banking 
Department  of  the  state,  and  must  be  published  by  the 
Superintendent  of  the  Banking  Department  once  a  week  for 
six  weeks  successively  in  the  state  paper,  and  at  least  one 
newspaper  in  the  county  where  such  bank  is  located.3 

It  is  provided  that  the  liability  of  the  stockholders  of 
such  bank  shall  in  no  wise  be  affected  by  such  reduction, 
nor  the  rights,  remedies  or  security  of  any  creditors  im- 
paired.4 

Reduction  of  Capital  Stock  by  other  Moneyed  Corporations. — 
Substantially  the  same  provisions  as  those  above  stated  in 
regard  to  banks  are  extended  to  trust  companies  and  other 
moneyed  corporations,  organized  under  the  laws  of  this 
state,  and  required  to  report  to  the  Superintendent  of  the 
Banking  Department.5 

May  Increase  their  Capital  Stock. — Any  such  corporation, 
having  reduced  its  capital,  may,  after  such  reduction  has 
been  made,  increase  its  capital  stock  to  an  amount  not  ex- 
ceeding the  amount  provided  in  its  charter. 

Such  increase  must  be  apportioned   among   the   stock- 

1  Laws  of  18S2,  chap.  409,  §  42.  4  Id.  §  45. 

8  Id.  §  43-  5  Id.  §§  228-231. 

3  Id.  §  44- 


Il6  THE   LAW   OF   CORPORATIONS. 

holders  of  such  company,  who  must  severally  be  notified  in 
writing  of  such  apportionment,  and  such  notification  mailed 
to  or  delivered  at  the  last  known  residence  of  each  share- 
holder ;  and  if  they  or  any  of  them  shall  not,  within  one 
month  after  service  of  such  notice,  accept  the  amount  so 
apportioned,  then  such  increase  or  the  amount  not  accepted 
by  the  stockholders  may  be  sold  and  distributed  by  the  board 
of  trustees  in  such  manner  as  it  may  determine. 

Upon  the  payment  to  the  company  in  money  of  such  in- 
creased capital,  the  board  of  trustees  must  certify  the  same 
to  the  Superintendent  of  the  Banking  Department,  who  will 
require  satisfactory  proof  that  the  increased  capital  has  been 
actually  been  paid  in  in  money,  and  such  proof  must  be  in 
writing,  and  filed  in  the  Banking  Department.1 

The  attorney-general,  in  an  opinion  filed  October  twen- 
tieth, 1883,  held  that  a  bank  might  reduce  its  capital  stock 
for  the  purpose  of  making  good  an  impairment  of  its  capital, 
even  after  a  requisition  had  been  made  upon  it  by  the 
Superintendent  to  make  it  good.  And  he  further  held  that 
its  own  stock,  held  by  it,  should  be  counted  as  an  asset  of  the 
bank,  but  that  it  could  not  be  used  in  petitioning  for  such 
reduction.2 

The  act  to  provide  for  the  organization  of  trust  com- 
panies, etc.,  contains  a  provision  that  the  capital  stock  of  a 
trust  company  may  be  increased  from  time  to  time  by  a  vote 
of  two  thirds  of  its  stockholders,  in  number  and  amount,  to 
a  sum  not  exceeding  two  million  dollars.3 

The  act  contains  no  provisions  as  to  the  manner  of  in- 
crease, and  trust  companies  are  expressly  excepted  from  the 
general  act  providing  for  the  increase  of  capital  stock  by 
corporations,4  nor  does  the  act  apply  to  trust  companies 
chartered  by  special  acts  of  the  legislature  and  existing  at 
the  time  of  the  passage  of  the  act.5 

1  Laws  of  1882,  chap.  409,  §  232.  3  Laws  of  1S87,  chap.  546,  §  19. 

2  The  opinion  is  given  in    full  in  4  Ante,  p.  108. 

Paine's  Banking  Laws,  p.  120.  5  Laws  of  1S87,  chap.  546,  §  37. 


THE   CAPITAL   STOCK.  117 

Increase  of  Capital  Stock  by  Safe-Deposit  Companies. — Corpora- 
tions organized  under  the  act  to  authorize  the  formation  of 
corporations  for  the  safe-keeping  and  guarantying  of  personal 
property  may  increase  their  capital  stock  to  an  amount  not 
to  exceed  one  million  dollars  by  the  board  of  trustees,  on 
application  in  writing  signed  by  the  stockholders  represent- 
ing a  majority  of  the  stock. 

A  statement  of  such  increase  must  be  filed  in  the  office 
of  the  clerk  of  the  county  in  which  the  business  of  the  cor- 
poration is  carried  on,  and  duplicates  thereof  in  the  office 
of  the  secretary  of  state  and  in  the  Banking  Department  of 
the  state.1 

Increase  of  Capital  Stock  by  Railroad  Companies. — Any  com- 
pany, organized  and  existing  under  the  laws  of  this  state, 
in  case  the  capital  stock  of  the  company  is  found  to  be  in- 
sufficient for  constructing  and  operating  its  road,  may,  with 
the  concurrence  of  two-thirds  in  amount  of  all  its  stock- 
holders, with  the  written  approval  of  the  board  of  railroad 
commissioners,  increase  its  capital  stock  from  time  to  time 
to  any  amount  required  for  such  purposes. 

Such  increase  must  be  sanctioned  by  a  vote,  in  person  or 
by  proxy,  of  two-thirds  in  amount  of  all  the  stockholders  of 
the  company  at  a  meeting  called  by  the  directors  for  that 
purpose,  by  a  notice  in  writing  to  each  stockholder,  served 
on  him  personally,  or  by  mail,  at  least  twenty  days  prior  to 
such  meeting.  Such  notice  must  state  the  time  and  place  of 
such  meeting,  its  object  and  the  amount  to  which  it  is  pro- 
posed to  increase  the  capital  stock. 

The  proceedings  of  such  meeting  must  be  entered  on  the 
minutes  of  the  proceedings  of  the  company,  and  the  capital 
stock  may  thereupon  be  increased  to  the  amount  sanctioned 
by  a  vote  of  two  thirds  in  amount  of  all  the  stockholders. 

A  copy  of  such  notice  must  also  be  published  within  the 
county  wherein  the  main  office  of  such  company  is  located, 

1  Laws  of  1875,  chap.  613,  §  1,  as  amended  by  Laws  of  18S3,  chap.  273. 


Il8  THE   LAW   OF   CORPORATIONS. 

once  a  week  for  four  weeks  prior  to  such  meeting,  in  a  news- 
paper to  be  designated  by  the  board  of  railroad  commis- 
sioners.1 

Increase  in  Case  of  Reorganization. — Whenever  the  maximum 
amount  of  capital  stock  mentioned  in  the  certificate  of  in- 
corporation of  any  railroad  company  on  file  in  the  office  of 
the  secretary  of  state  shall  be  insufficient  to  carry  out  any 
plan  or  agreement  of  reorganization  set  forth  in  such  certifi- 
cate of  incorporation,  a  majority  of  the  directors  may  file  an 
additional  certificate  with  the  secretary  of  state,  setting  forth 
the  fact  of  such  insufficiency  and  the  additional  amount  of 
capital  stock  required  to  carry  out  such  plan  or  agreement 
of  reorganization  ;  and  thereupon,  with  the  approval  of  the 
state  engineer  or  surveyor,  the  company  may  issue  such 
capital  stock  as  fully  as  if  the  same  had  been  mentioned  or 
set  forth  in  the  original  certificate  of  incorporation.  Such 
additional  certificate  must  be  filed  in  the  office  of  the  secre- 
tary of  state  within  two  months  after  the  passage  of  the  aet* 

Increase  and  Reduction  of  Capital  Stock  by  Companies  organized 
to  operate  Railroads  in  Foreign  Countries. — Any  corporation 
formed  under  this  act  may  from  time  to  time,  at  any  regular - 
or  special  meeting  of  the  board  of  directors,  reduce  the 
amount  of  its  capital  stock  or  increase  the  same  with  the 
consent  in  writing  of  stockholders  owning  two-thirds  of  the 
capital  stock.  If  any  increase  or  reduction  of  the  capital 
stock  is  made,  a  certificate  of  the  fact,  signed  by  the  presi- 
dent and  secretary  of  the  corporation,  must  be  filed  in  the 
office  of  the  secretary  of  state  within  thirty  days  thereafter.3 

Increase  of  Capital  Stock  by  Bridge  Companies. — The  directors 

of  every  such  corporation  may  at  any  time,  with  the  consent 
of  the  majority  in  amount  of  the  stockholders  of  such  cor- 

1  Laws  of  1850,  chap.  140,  §  9,  as  what  uncertain  whether  it  was  in- 
amended  by  Laws  of  1889,  chap.  tended  to  have  an  application  to 
426.  companies  not  then  availing   them- 

2  Laws   of    1880,   chap.    155,  §   1.  selves  of  its  provisions. 

While  the  language  of  the  act  is  gen-  3  Laws  of  1881,  chap.  468,  §  ti. 

eral,  the  last  clause  renders  it  some- 


THE   CAPITAL   STOCK.  U9 

poration,  provide  for  such  increase  of  its  capital  stock  as 
may  be  necessary  for  the  completion  or  reconstruction  of  its 
bridge.  The  certificate  of  the  amount  of  any  such  increase 
must,  within  thirty  days  thereafter,  be  filed  in  the  offices  of 
the  state  engineer  and  surveyor  and  the  clerks  of  the  Counties 
where  such  bridge  is  located,  which  certificate  must  be  au- 
thenticated by  the  signatures  and  oaths  of  a  majority  of  the 
directors.1 

Increasing  and  Decreasing  Capital  Stock  by  Building  Companies. — 
Companies  organized  for  the  purpose  of  erecting  buildings, 
etc.,  may  increase  or  diminish  their  capital  to  any  amount 
not  less  than  three  thousand  dollars  by  proceedings  sub- 
stantially similar  to  those  in  the  case  of  companies  organized 
under  the  Manufacturing  Act.2 

Increasing  and  Decreasing  Capital  Stock  by  Business  Corporations. 
— Section  1 5  of  the  Business  Act  provides  that  the  capital 
stock  of  any  corporation  organized  under  the  act  may  be 
increased  to  an  amount  not  to  exceed  in  the  aggregate  two 
million  dollars,  or  reduced  by  a  vote  of  a  majority  of  the 
stockholders  in  number  and  representing  a  majority  of  the 
stock  of  such  corporation,  at  any  meeting  thereof  convened 
for  that  purpose,  pursuant  to  notice  thereof  mailed  to  each 
stockholder  at  least  five  days  before  such  meeting. 

A  statement  of  such  increase  or  reduction  must  be  filed 
in  the  office  of  the  secretary  of  state  and  of  the  clerk  of  the 
county  in  which  the  principal  business  office  of  such  corpo- 
ration is  situated,  within  ten  days  after  such  action.  But 
before  any  corporation  shall  be  entitled  to  diminish  the 
amount  of  its  capital  stock,  if  the  amount  of  its  debts  and 
liabilities  exceed  the  amount  of  capital  to  which  it  is  pro- 
posed to  be  reduced,  such  amount  of  debts  and  liabilities 
must  be  first  satisfied  and  reduced  so  as  not  to  exceed  such 
diminished  amount  of  capital.3 

1  Laws  of  1848,  chap.  259,  §  13.  chap.  238. 

8  Laws    of    1853,    chap.     117,    g§  3  Laws  of  1875,  chap.  611,  §  15. 

20-22,  as  amended  by  Laws  of  1883, 


120  THE   LAW   OF   CORPORATIONS. 

It  will  be  noticed  that  this  section  provides  only  for  an 
increase  up  to  two  million  dollars,  which  is  the  amount  of 
capital  originally  authorized  by  the  act,  but  which  has  sub- 
sequently been  increased  to  five  million  dollars.  No  par- 
ticular formalities  are  prescribed,  but  as  the  section  can  be 
availed  of  in  order  to  diminish  the  amount  of  capital  stock 
only  by  corporations  organized  under  the  act  prior  to  May 
15th,  1878,  and  as  even  such  corporations  may  avail  them- 
selves of  the  general  act,1  its  provisions  and  limitations 
become  of  comparatively  little  importance. 

Increasing  Capital  Stock  of  Ferry  Companies. — The  capital 
stock  of  ferry  companies  may  be  increased  up  to  the  limit 
specified  in  the  certificate  of  incorporation  by  a  vote  of  the 
stockholders  representing  a  majority  of  the  whole  stock  of 
the  company,  at  any  annual  meeting  or  special  meeting  called 
for  the  purpose.  When  any  increase  is  determined  upon,  a 
certificate  thqreof,  signed  by  a  majority  of  the  directors, 
must,  within  ten  days  thereafter,  be  filed  in  the  offices  in 
which  the  original  certificate  has  been  filed.2 

Increase  of  Capital  Stock  by  Driving-Park  Associations. — Such 
associations  may  increase  their  capital  stock  to  any  amount 
not  exceeding  that  provided  in  the  act  of  incorporation,  at 
any  annual  meeting,  by  a  vote  of  not  less  than  two-thirds  in 
amount  of  the  stockholders.  Twenty  days'  notice  of  such 
intention  must  have  been  given  to  each  stockholder  by  mail- 
ing to  him  such  notice,  stating  the  time  and  place  of  such 
meeting  and  to  what  amount  it  is  proposed  to  increase  the 
capital  stock.2 

Increase  of  Capital  Stock  by  Pipe-Line  Companies. — The  act 
for  the  incorporation  of  pipe-line  companies  contains  the 
following  provisions  as  to  the  increase  of  capital  stock : 

"  In  case  the  capital  stock  of  any  company  formed  under 
this  act  is  found  to  be  insufficient  for  constructing  and  oper- 


1  Ante,  p.  107.  3  Laws  of  1872.  chap.  248,  §  7,  as 

2  Laws  of  1853,  chap.  135,  §  15.  amended  by  Laws  of  1886,  chap.  140. 


THE  CAPITAL   STOCK.  121 

ating  its  pipe  line,  such  company  may,  with  the  concurrence 
of  two-thirds  in  amount  of  all  its  stockholders,  and  upon  an 
order  of  the  supreme  court  to  be  granted  in  the  discretion 
of  the  court,  upon  the  petition  of  the  directors,  and  notice 
of  such  application,  of  not  less  than  fifteen  days,  upon  all 
stockholders  appearing  upon  the  stock  book  of  said  corpo- 
ration, who  shall  not  have  consented  to  such  increase  (in 
such  manner  as  the  court  shall  direct),  increase  its  capital 
stock  from  time  to  time,  to  any  amount  required  for  such 
purposes,  and  in  all  such  cases  the  petition  to  the  court  shall 
be  by  affidavit,  and  shall  show  the  amount  of  the  proposed 
increase,  and  the  reasons  therefor  ;  that  two-thirds  in  amount 
of  all  the  stockholders  of  such  corporation  entitled  to  vote 
at  such  meeting,  personally  or  by  proxy,  had  voted  for  such 
increase  at  a  meeting  of  the  stockholders,  called  by  a  resolu- 
tion of  the  directors  for  that  purpose,  and  notice  thereof 
served  upon  each  stockholder  thereof  at  least  twenty  days 
previous  to  the  time  of  such  meeting,  and  that  such  notice 
contained  the  time,  place  and  object  of  such  meeting,  and 
the  amount  to  which  such  capital  stock  was  proposed  to  be 
increased,  and  that  the  amount  of  the  increase  prayed  for  in 
the  petition  is  not  for  a  greater  amount  than  that  specified 
in  such  notices ;  and  thereupon,  upon  the  hearing,  the  court 
may  make  an  order,  in  its  discretion,  increasing  the  capital 
stock  of  such  company  in  the  amount  prayed  for  in  such 
petition,  or  in  such  lesser  sum  or  amount  as  the  court  may 
fix,  and  upon  the  filing  and  entry  of  such  order  the  capital 
stock  of  such  corporation  may  be  increased  in  the  amount 
mentioned  therein,  and  the  directors  may  proceed  to  take 
and  receive  subscriptions  in  the  same  manner  as  provided 
for  in  the  original  organization  of  such  a  corporation."  ' 

1  Laws  of  1S78,  chap.  203,  §  10.    As  would    follow    that    this    would    un- 

this  act  is  later  than  the  general  act  doubtedly    be    the    only    manner    in 

for  the  increase  of  capital   stock  of  which  such  corporations  could  effect 

corporations  generally,  and  contains  an    increase   of   their   capital    stock, 

particular  formalities  to  be  taken,  it  See  ante,  p.  108. 


122  THE   LAW   OF   CORPORATIONS. 

Increase  of  Capital  Stock  by  Stage-Coach  Companies. — The 
capital  stock  of  such  companies  may  be  increased  to  any 
amount  required  for  their  business.  Such  increase  must  be 
sanctioned  by  a  vote  of  two-thirds  in  amount  of  all  the 
stockholders  of  the  company,  at  a  meeting  of  the  stock- 
holders called  by  the  directors  for  that  purpose,  by  a  notice 
served,  personally  or  by  mail,  at  least  twenty  days  prior  to 
such  meeting.  Such  notice  must  state  the  time  and  place 
of  such  meeting  and  its  object,  and  the  amount  to  which  it 
is  proposed  to  increase  the  capital.1 

Increase  of  Capital  Stock  by  Telegraph  Companies. — Telegraph 
companies  may  provide  in  their  articles  of  association  for  an 
increase  of  their  capital  and  number  of  shares.  But  if  any 
such  association  has  omitted  so  to  do,  it  may  increase  its 
capital,  after  a  notice  of  such  intention  has  been  published 
once  a  week  for  six  weeks  successively  in  the  state  paper, 
and  in  any  newspaper  of  general  circulation  published  in  the 
county  where  the  principal  office  of  such  company  is  located, 
and  with  the  written  consent  of  stockholders  owning  three- 
fourths  in  amount  of  the  then  capital  stock,  by  making  and 
executing  an  additional  certificate,  which  must  be  proved 
and  acknowledged  by  a  majority  of  the  board  of  directors 
and  filed  in  the  same  manner  as  the  original  certificate.2 

Increase  of  Capital  Stock  by  Turnpike  Companies. — The  act  for 
the  incorporation  of  turnpike  and  plank-road  companies 
provides  that  the  directors  of  every  such  company  may  at 
any  time,  with  the  consent  of  a  majority  in  amount  of  the 
stockholders  of  such  company,  provide  for  such  increase  of 
its  capital  stock  as  may  be  necessary  to  finish  the  making  of 
a  road  actually  commenced  and  partly  constructed,  but  not 
to  exceed  five  thousand  dollars  per  mile  for  each  mile  of 
road.3 

Increasing  and  Decreasing  Capital  Stock  by  Water-Works  Com- 
panies.— Any  company  formed  under  the  act  in  relation  to 

1  Laws  of  1867,  chap.  974,  §  9.  amended  by  Laws  of  1875,  chap.  319. 

2  Laws  of  1848,  chap.  265,  §  8,  as  3  Laws  of  1847,  chap.  210,  §  40. 


THE   CAPITAL   STOCK.  1 23 

the  creation  and  formation  of  water-works  companies  in 
towns  and  villages  of  the  State  of  New  York  may  increase 
or  diminish  its  capital  stock  to  any  amount  which  may  be 
deemed  sufficient  and  proper  for  the  purposes  of  the  com- 
pany, by  a  vote  of  the  stockholders  representing  not  less 
than  two-thirds  of  the  capital  stock,  at  any  meeting  of  the 
stockholders,  duly  called,  and  signing  and  acknowledging  a 
certificate  showing  the  amount  of  the  capital  stock  of  the 
company,  the  amount  to  which  it  is  to  be  increased  or 
diminished,  and  the  amount  of  the  capital  stock  owned  or 
represented  by  each  of  the  persons  signing  the  certificate, 
which  certificate  must  be  signed  by  stockholders  owning  or 
representing  not  less  than  two-thirds  of  the  capital  stock  of 
the  company,  and  acknowledged  before  some  officer  com- 
petent to  take  the  acknowledgment  of  deeds,  and  filed  in  the 
office  of  the  clerk  of  the  county  in  which  the  certificate  of 
the  organization  of  the  company  is  filed,  and  a  duplicate 
thereof  in  the  office  of  the  secretary  of  state ;  and  when  so 
filed,  the  capital  stock  of  such  company  will  be  increased  or 
diminished  to  the  amount  specified  in  such  certificate  ;  pro- 
vided, if  the  amount  of  the  debts  and  liabilities  of  the  com- 
pany exceeds  the  amount  of  capital  to  which  it  is  proposed 
to  be  reduced,  such  amount  of  debts  and  liabilities  shall  be 
satisfied  and  reduced  so  as  not  to  exceed  such  diminished 
amount  of  capital.1 

STOCK   CERTIFICATES   AND   TRANSFERS   OF   STOCK. 
The  shares  of   stock  of  a  corporation  are  personal  prop- 
erty,8 and  a  certificate  is  the  evidence  of  the  stockholder's 
title  thereto.3    In  the  absence  of  statutory  pro/isions  regu- 

1  Laws  of  1S81,  chap.  77.  the  various  companies  referred  to  in 

s  Weaver  v.  Barden,  49  N.  Y.  286.  Chapter  I),  but  this  is  only  declara- 

It  is  very  common  for  an  article  to  tory  of  the  law. 

be  inserted  in  acts  of  incorporation  8  Jermain  v.  Lake  Shore  &>  Mich. 

providing  that  the  stock  of  such  com-  South.  Ry.   Co.,  91    N.  Y.   483.     As 

pany  shall   be  deemed  personal  es-  to  the  rights  of  stockholders  to  certifi- 

tate   (see    Laws    of    1S48,  chap.   40,  cates,  etc.,  see  Chap.  VI..  post. 
§  8,  and  the  acts  of  incorporation  of 


124  THE   LAW   0F   CORPORATIONS. 

lating  the  number  and  par  value  of  shares,  they  may  be 
of  any  desired  number  and  par  value  that  the  by-laws  may 
prescribe,  and  shares  may  be  divided  and  certificates  issued 
for  fractional  shares  ;  but,  except  as  expressly  authorized,  the 
number  and  par  value  of  the  shares  cannot  be  changed  from 
the  number  and  amount  adopted  at  the  organization.1 

Nor  can  a  company,  except  as  authorized  by  its  act  of 
incorporation,  impose  a  lien  upon  its  shares  for  the  in- 
debtedness of  the  shareholder  to  the  company;2  nor  can  it, 
except  as  so  authorized,  declare  the  forfeiture  of  its  shares 
for  the  non-payment  of  instalments  of  subscription.3 

The  several  acts  of  incorporation  generally  contain  pro- 
visions regulating  the  nature  and  transfer  of  stock,'  and  also 
frequently  in  regard  to  the  increase  and  decrease  of  number 
of  shares,  forfeiture,  etc.  The  principal  provisions  are  given 
below. 

Under  the  Manufacturing  Act. — This  act  provides  that  the 
stock  of  such  company  shall  be  deemed  personal  estate,  and 
shall  be  transferable  in  such  manner  as  shall  be  prescribed 
by  the  by-laws  of  the  company  ;  but  no  shares  shall  be  trans- 
ferable until  all  previous  calls  thereon  shall  have  been  fully 
paid  in,  or  shall  have  been  declared  forfeited  for  the  non- 
payment of  calls  thereon.4 

It  is  further  provided  that  the  trustees  may  call  in  and 
demand  from  the  stockholders,  respectively,  all  such  sums  of 
money  by  them  subscribed,  at  such  times  and  in  such  pay- 
ments or  instalments  as  the  trustees  shall  deem  proper, 
under  the  penalty  of  forfeiting  the  shares  of  stock  subscribed 
for,  and  all  previous  payments  made  thereon,  if  payment 
shall  not  be  made  by  the  stockholders  within  sixty  days 
after  a  personal  demand  or  notice  requiring  such  payment 

1  Oldtown  R.  R.   Co.  v.   Veazie,  39       Briscollv.  West  Bradley,  etc.,  M.  Co., 
Me.    571  ;    Salem   Mill  Dam    Co.  v.       59  id.  96. 

Ropes,  6  Pick.  23.  3  In  re  Long  Island  R.  R.  Co.,  19 

2  Bank  of  Attica  v.  Manufacturers       Wend.  37. 

&    Traders'  Bank,    20    N.    Y.   501  ;  4  Laws  of  1S48,  chap.  40,  §8. 


THE    CAPITAL    STOCK.  I25 

shall  have  been  published  for  six  successive  weeks  in  the 
newspaper  nearest  to  the  place  where  the  business  of  the 
company  shall  be  carried  on  as  aforesaid.1 

The  legal  title  to  stock  cannot  be  transferred  after  disso- 
lution,2 but  the  interest  of  the  owner  may  be  assigned  sub- 
ject to  all  existing  equities.3 

Any  such  company  may  increase  the  number  of  shares 
of  which  its  capital  stock  consists,  provided  its  capital  stock 
shall  not  thereby  be  increased  or  diminished.4 

Such  increase  must  be  made  by  a  vote  of  the  stockhold- 
ers representing  two-thirds  of  the  capital  stock,  at  any  meet- 
ing of  the  stockholders  called  in  the  manner  prescribed  in 
the  act,  by  executing  and  acknowledging  an  amended  cer- 
tificate specifying  the  number  of  shares  of  which  the  capital 
stock  of  the  company  shall  thereafter  consist  and  the  par 
value  of  each  share,  and  in  other  respects  conforming  to  the 
original  certificate.  The  amended  certificate  must  be  signed 
by  the  president  and  two-thirds  of  the  directors  of  such  com- 
pany, and  be  filed  in  the  office  of  the  secretary  of  state  and 
in  the  clerk's  office  of  the  county  wherein  the  original  cer- 
tificate was  filed/ 

Each  stockholder  will  be  entitled  to  a  certificate  for  such 
a  number  of  shares  of  the  capital  stock,  after  the  whole 
number  has  been  increased,  as  shall  at  their  par  value  be 
equal  to  the  par  value  of  the  shares  previously  held  by  him 
in  such  company,  on  surrendering  the  old  certificate  to  be 
cancelled.  No  such  increase  shall  be  made  as  to  divide  the 
shares,  and  give  a  fractional  part  of  a  share  to  any  stock- 
holder.' 

Business  Corporations. — The  capital  stock  of  corporations 
formed  under  this  act  must  be  divided  into  shares  of  not 
less   than   ten  dollars,  nor   more   than  one  hundred  dollars 


1  Laws  of  1848,  chap  40,  §  6.  59  id.  96. 

1  James  v.   Woodruff,  2  Den.  574.  4  Laws  of  1S66,  chap.  73,  §  I. 

3  Weaver  v.  Barden,  49  N.  Y.  286  ;  5  Id.  §  2. 

Driscollv.  West  Bradley,  etc.,  M.  Co.,  6  Id.  £  3. 


126  THE    LAW    OF   CORPORATIONS. 

each.  All  subscriptions  are  made  payable  to  the  corpora- 
tion, in  such  instalments  and  at  such  time  or  times  as  may 
be  fixed  by  the  by-laws,  or  by  the  directors  acting  under 
the  by-laws.  If  default  is  made  in  any  payment  on  sub- 
scription, an  action  may  be  maintained  in  the  name  of  the 
corporation  to  recover  any  instalment  remaining  due  and  un- 
paid for  the  period  of  thirty  days  after  the  time  fixed  for  its 
payment.  And  no  stockholder  is  entitled  to  vote  at  any 
election  or  at  any  meeting  of  the  stockholders  on  whose 
stock  any  instalments  or  arrearages  may  have  been  due  and 
unpaid  for  the  period  of  thirty  days  immediately  preceding 
such  election  or  meeting. 

Such  a  corporation  may  by  its  by-laws  prescribe  other 
penalties  for  a  failure  to  pay  instalments,  not  exceeding  for- 
feiture of  stock  and  the  amount  paid  thereon.  No  such 
forfeiture  can  be  declared  against  any  stockholder  before 
demand  has  been  made  for  the  amount  due  thereon  either 
in  person  or  by  a  written  or  printed  notice  mailed  to  such 
stockholders  at  least  thirty  days  prior  to  the  time  when  such 
forfeiture  is  to  take  effect.  Upon  such  forfeiture  the  shares 
of  stock  held  by  such  delinquent  stockholder  must  be  sold 
at  public  auction  at  the  office  of  the  corporation,  after  ten 
days'  notice  conspicuously  posted  in  such  office,  and  the 
proceeds  of  the  sale,  over  and  above  the  amount  due  on 
such  shares  and  after  deducting  the  expense  of  the  sale, 
must  be  paid  to  the  stockholder.1 

The  directors  of  such  corporations  must  prepare  certifi- 
cates of  stock  and  deliver  them,  signed  by  the  president  and 
treasurer  and  sealed  with  the  seal  of  the  corporation,  to  each 
person  entitled  to  receive  them  according  to  the  number  of 
shares  held.  Such  certificates  must  be  transferable  at  the 
pleasure  of  the  holder  in  person  or  by  attorney  duly  au- 
thorized, subject,  however,  to  all  payments  due  or  to  become 
due  thereon.     The  assignee  to  whom  stock  has  been  trans- 

i  Laws  of  1875,  chap.  611,  §  11,  as  amended  by  Laws  of  1883,  chap.  102. 


THE   CAPITAL   STOCK.  1 27 

ferred  will  be  a  member  of  the  corporation,  and  possess  all 
the  rights  and  privileges,  and  be  subject  to  all  the  liabilities, 
of  the  original  holder.  But  no  certificate  can  be  transferred 
so  long  as  the  holder  is  indebted  to  the  corporation  unless 
the  directors  consent  thereto.1 

Such  companies  may  increase  the  number  of  shares  of 
which  their  capital  stock  consists,  provided  the  shares  shall 
not  be  less  nor  more  than  the  amounts  fixed  by  the  act,  in 
the  same  manner  as  is  provided  for  companies  organized 
under  the  Manufacturing  Act.2 

Title  Guaranty  Companies. — The  act  for  the  incorporation 
of  companies  to  examine  and  guaranty  bonds  and  mortgages 
and  titles  to  real  estate,  provides  that  an  action  may  be  main- 
tained in  the  name  of  the  corporation  to  recover  any  instal- 
ment remaining  due  and  unpaid  for  thirty  days  after  the 
time  fixed  for  the  payment  thereof ;  and  that  no  stockholder 
shall  be  entitled  to  vote  at  any  meeting  on  whose  shares  any 
instalment  has  been  due  for  thirty  days  preceding  such 
meeting. 

It  also  provides  that  the  corporation  may  prescribe  by 
by-law  other  penalties  for  a  failure  to  pay  instalments,  not 
exceeding  forfeiture  of  the  stock  and  the  amount  paid 
thereon.  But  no  forfeiture  can  be  declared  unless  a  demand 
shall  have  been  made  for  the  amount  due,  either  in  person 
or  by  a  notice  duly  mailed  to  such  stockholder  at  least  thirty 
days  before  such  forfeiture  is  to  take  effect ;  and  in  case  of 
forfeiture  the  shares  of  such  stockholder  must  be  sold  at 
public  auction,  and  the  proceeds  of  such  sale,  over  and  above 
the  amount  due  on  such  shares  and  after  deducting  the  ex- 
penses of  such  sale,  if  any,  must  be  paid  to  such  stockholder 
or  his  legal  representatives.3 

Certificates  of  stock  of  such  companies,  signed  by  the 
president  and  treasurer  and  sealed  with  the  corporate  seal, 


1  Laws  of  1S75,  chap.  611,  §  12.  ante,  p.  125. 

2  Laws  of   1884,   chap.    397.      See  3  Laws  of  18S5,  chap.   538,  §  10. 


128  THE   LAW   OF   CORPORATIONS. 

must  be  made  and  delivered  to  each  stockholder,  transfer- 
able at  the  pleasure  of  the  holder  or  his  duly  authorized 
attorney.  But  no  certificate  may  be  transferred  so  long  as 
the  holder  thereof  is  indebted  to  the  corporation,  unless  the 
board  of  directors  shall  consent  thereto.1 

Railroads. — If  any  stockholder  in  a  railroad,  organized 
under  chapter  140  of  Laws  of  1850,  neglects  to  pay  any  in- 
stalment of  his  subscription  to  the  capital  stock,  as  required 
by  a  resolution  of  the  board  of  directors,  the  board  may 
declare  his  stock  and  all  previous  payments  thereon  forfeited 
for  the  use  of  the  company,  upon  giving  sixty  days'  notice, 
either  personally  or  by  mail,  that  if  he  fails  to  make  such 
payment  his  stock  and  all  previous  payments  thereon  will  be 
forfeited  for  the  use  of  the  company.2 

It  is  further  provided  that  the  stock  of  such  companies 
shall  be  deemed  personal  estate,  and  shall  be  transferable  in 
the  manner  prescribed  by  the  by-laws  of  the  company ;  but 
that  no  shares  shall  be  transferable  until  all  previous  calls 
thereon  shall  have  been  fully  paid  in.3 

Banks. — The  shares  of  banks  are  personal  property,  and 
are  transferable  on  the  books  of  the  association  in  such  man- 
ner as  may  be  agreed  on  in  the  articles  of  association.4 

Safe  Deposit  Companies. — The  trustees  of  such  companies 
may  make  calls  upon  the  stockholders  under  the  penalty  of 
forfeiture  of  the  shares  of  stock  subscribed  for,  and  all  pre- 
vious payments  made  thereon,  if  payment  shall  not  be  made 
by  the  stockholders  within  sixty  days  after  a  personal 
demand  of  the  same,  or  after  a  notice  requiring  such  pay- 
ment shall  have  been  published  for  six  successive  weeks  in 


1  Laws  of  1885,  chap.  538,  §  11.  as  to  forfeiture  of  shares,  upon  giv- 

2  Laws  of  1S50,  chap.  140,  §  7.  ing  a  like  notice  to  the  stockholder 
The  act  for  the  formation  of  com-  thirty  days  before  such  forfeiture, 
panies  for  the  purpose  of  construct-  Laws  of  1881,  chap.  468,  §  8. 

ing  and  operating  railroads  in  foreign  3  Laws  of  1850,  chap.  140,  §  8. 

countries  contains  a  like    provision  4  Laws  of  1882,  chap.  409,  §  47. 


THE   CAPITAL   STOCK.  129 

a  newspaper  printed  in  the  city  or  town  where  the  business 
of  the  corporation  is  carried  on.' 

The  act  further  provides  that  the  stock  of  such  corpo- 
ration shall  be  deemed  personal  estate,  and  shall  be  trans- 
ferable in  such  manner  as  shall  be  prescribed  by  the  by-laws 
of  the  corporation  ;  but  no  shares  shall  be  transferable  until 
all  previous  calls  thereon  shall  have  been  fully  paid  in,  or 
shall  have  been  declared  forfeited  for  the  non-payment  of 
calls.2 

Miscellaneous  Corporations. — The  acts  for  the  organization 
of  the  several  corporations  combined  under  the  above  head 
in  the  first  chapter  of  this  work,  with  the  exception  of  tele- 
graph companies,  contain  provisions  as  to  the  forfeiture  of 
shares  and  the  instalments  paid  thereon  upon  notice  to  the 
subscribers.3 

1  Laws,  of  1875,  chap.  613,  §  6.  ganization  of  such  corporations  given 

2  Id.  §  8.  in  Chapter  I,  Article  VI,  ante. 
a  See  the  several  acts  for  the  or- 


130  THE    LAW    OF   CORPORATIONS. 


CHAPTER  IV. 
THE  DUTIES  OF  OFFICERS  AND  DIRECTORS. 

Art.  I.  Acts  Required. 
Art.  II.  Acts  Prohibited. 

Article  I. 

Acts  required. 

The  acts  required  of  corporations  can  only  be  performed 
by  their  chosen  officers  or  agents,  and  the  law  casts  upon 
such  officers  or  agents  certain  duties  which  they  are  required 
to  perform,  either  as  the  act  of  the  corporation  itself,  or  as 
their  own  act  as  such  officers  and  agents.  In  most  cases 
the  performance  of  such  duties  is  enforced  by  penalties  for 
the  failure,  exacted  either  from  the  corporation  itself,  or 
certain  of  its  officers  or  stockholders. 

REPORTS. 

One  of  the  most  important  of  the  duties  thus  imposed  is 
that  of  making  corporate  reports.  With  but  few  exceptions,' 
all  corporations  are  required  to  make  periodical  reports, 
with  greater  or  less  fulness,  of  their  financial  condition. 
Some  of  these  reports,  as  in  the  case  of  railroads  and  insur- 
ance companies,  are  made  with  great  minuteness,  while  of 
others,  as  in  the  case  of  manufacturing  and  business  corpor- 
ations, much  less  is  requisite. 

Reports  of  Manufacturing  Corporations. — Annual  Reports. — Cor- 
porations organized  under  the  Manufacturing  Act  are  re- 
quired, within  twenty  days  from  the  first  day  of  January,  if 

1  There  appears  to  be  no  provision       panies,     navigation     companies,    or 
for   such    reports     by     hotel     com-       stagecoach  companies. 


THE   DUTIES   OF   OFFICERS   AND   DIRECTORS.  13I 

a  year  from  the  time  of  filing  the  certificate  of  incorporation 
shall  then  have  expired,  and  if  so  long  a  time  shall  not  have 
expired,  then  within  twenty  days  from  the  first  day  of  January 
in  each  year  after  the  expiration  of  a  year  from  the  time  of 
filing  such  certificate,  to  make  a  report,  which  shall  be  pub- 
lished in  some  newspaper  published  in  the  town,  city  or  vil- 
lage, or  if  there  be  no  newspaper  published  in  such  town, 
city  or  village,  then  in  some  newspaper  published  nearest 
the  place  where  the  business  of  the  company  is  carried  on, 
which  shall  state  the  amount  of  the  capital,  and  of  the 
proportion  actually  paid  in,  and  the  amount  of  its  existing 
debts. 

This  report  must  be  signed  by  the  president  and  a  ma- 
jority of  the  trustees,  and  must  be  verified  by  the  oath  of  the 
president  or  secretary  of  such  company,  and  be  filed  in  the 
office  of  the  clerk  of  the  county  where  the  business  of  the 
company  is  carried  on.' 

How  Executed. — Making  such  a  report  is  a  corporate  duty 
to  be  discharged  by  making  a  report  signed  by  the  president 
and  a  majority  of  the  trustees.  The  duty  is  not  cast  upon 
the  trustees  either  as  such  or  in  their  individual  capacities. 
It  is  the  duty  of  the  company  to  make  the  report,  and  the 
act  provides  for  the  manner  of  performing  it.*  Thus  the 
secretary  of  a  company,  while  he  is  authorized  to  verify  the 
report  in  place  of  the  president,  and  may  prepare  the  report 
for  the  signatures  ot  the  proper  officers,  has  no  authority  to 
subscribe  the  names  of  the  president  and  trustees.  This  can 
only  be  done  by  the  persons  designated.3 

The  object  of  the  act  is  to  require  a  statement  of  suffi- 
cient distinctness  that,  if  untrue,  perjury  could  be  assigned.' 
For  this  reason  acknowledgment  is  not  sufficient.     It  must 


1  Laws  of  184S,  chap.  40,  §  12,  as  101  N.Y.  373. 

amended  by  Laws  of  1S75,  chap.  510.  3  Bolen   v.    Crosby,    49    N.  Y.    183; 

As  to  liability  of   trustees   for  failure  Sanborn  v.  Lefferts,  58  id.  179. 

to  make  report,  see  Chapter   V,  post.  *   Whitney  Arms  Co.  v.  Barlow,   63 

a  Andrews,  J.,  in  Cornell  v.  Roach,  N.  Y.  62. 


I32  THE   LAW    OF   CORPORATIONS. 

be  verified; '  but  the  verification  rqay  be  on  information  and 
belief.2 

Where  the  president,  who  is  a  trustee  of  a  corporation, 
and  enough  trustees  to  constitute  with  him  a  majority  of 
the  board  sign  the  report,  it  is  a  compliance  with  the  statute 
requiring  "  the  president  and  -a  majority  of  the  trustees  "  to 
sign.3 

Form  of  Report. — The  statute  does  not  provide  for  the  de- 
tails of  the  reports  of  manufacturing  corporations.  The  lan- 
guage is  extremely  concise,  providing  only  that  the  report 
shall  state  "  the  amount  of  capital  stock  and  of  the  propor- 
tion actually  paid  in,  and  the  amount  of  its  existing  debts." 

This  conciseness,  and  perhaps  indefiniteness,  taken  in 
connection  with  the  severe  penalty  attached  to  the  omission 
to  file  a  report  or  the  filing  of  a  false  report,4  has  given  rise 
to  much  litigation,  and  this  section  has  been  the  subject  of 
frequent  judicial  construction. 

As  to  what  is  a  compliance  with  the  law  in  the  form  of 
a  report  the  courts  have  uniformly  given  a  liberal  construc- 
tion. As  was  said  by  Allen,  J.,  in  Whitney  Arms  Co.  v.  Bar- 
lotv: 5  "  The  reports  of  corporations  should  receive  a  reasonable 
interpretation,  and  excessive  nicety  or  exactness  should  not 
be  exercised  in  bringing  them  to  the  test  of  the  statutes." 

A  substantial  compliance  with  the  statute  is  sufficient. 
While,  therefore,  clearness  and  exactness  are  certainly  de- 
sirable in  such  reports,  yet  if  from  the  report  the  amount 
of  capital  and  the  proportion  actually  paid  in  can  reason- 
ably be  ascertained,  and  if  the  debts  are  not  under-stated, 
the  statute  will   be  complied  with.0 

Where,  however,  any    portion    of    the    capital    stock    is 

1  Brown   v.  Smith,  13    Hun,    408;       further  consideration  of  this  section 
aff'd,  So  N.  Y.  650.  and  the  liabilities  growing  out  of  it. 

2  Glens  Falls    Paper  Co.  v.  White,  5  63  N.  Y.  62. 

18  Hun,  214.  6  Whitney  Arms  Co.  v.  Barlow,  63 

s  Id.  N.  Y.  62;  Bonnellv.  Griswold,  80  id. 

4  See  Chap.  V  {post)  on  the  liabili-  128;    Pier   v.    Hanmore,    86    id.    95; 

ties    of  officers    and    directors    for  a  Whitaker  v.  Maslerton,  106  id.  277. 


THE    DUTIES    OF    OFFICERS    AND    DIRECTORS.  133 

issued  for  property,  this  stock  must  not  be  stated  or  re- 
ported as  being  issued  for  cash  paid  intb  the  company, 
but  must  be  reported  in  this  respect  according  to  the 
fact.'  But  a  statement  in  a  report  that  a  certain  amount 
of  capital  has  been  paid  in,  without  specifying  that  the 
alleged  payment  consists  of  the  issue  of  stock  for  property 
purchased,  is  equivalent  to  a  representation  that  such 
capital  has  been  paid  in  in  cash,  and  constitutes  a  false 
report  if  such  be  not  the  fact." 

It  is  not,  however,  essential  that  the  exact  amount  of 
stock  issued  for  property  and  the  amount  for  cash  be 
separately  stated.  It  is  sufficient  if  it  appear  that  all  the 
stock  was  issued  for  property,  or  for  cash,  or   both.3 

Where  a  report  is  susceptible  of  two  different  construc- 
tions, one  of  which  would  constitute  a  false  report,  while 
the  other  would  be  fairly  and  reasonably  consistent  with 
the  facts,  if  there  is  no  evidence  of  fraud  in  making  the 
report,  such  construction  will  be  given  to  it  as  was 
evidently  intended.4  But  where  it  is  impossible  to  gather 
from  any  construction  of  the  report  the  facts  required  by 
the  statute,  it  will  constitute  a  failure  to  comply  with  it. 

When  Report  must  be  made. — The  statute  directs  that 
the  report  be  made  within  twenty  days  from  the  first 
day  of  January,  if  a  year  from  the  time  of  filing  the  cer- 
tificate of  incorporation  shall  then  have  expired,  and  if  so 
long  a  time  shall  not  have  expired,  then  within  twenty  days 
from  the  first  day  of  January  in  each  year  after  the  ex- 
piration  of  such  time. 


1  Laws  of  1853,  chap.  333,  §  2.  etc.,  necessary  to  the  business,  and 

2  Pier  v.  Hanmore,  86  N.  Y.  95.  for  which  stock  to  the  amount  of  the 

3  Whitaker  v.  Masterton,  106  N.Y.  value  thereof  has  been  issued  by  the 
277.  In  this  case  the  report  was  as  company;  amount  of  the  existing 
follows:  "  Amount  of  capital  of  the  debts  of  the  company  does  not  exceed 
company,  $50,000,  amount  of  the  $38,500."  It  was  held  sufficient, 
capital  paid  in,  $50,000,  all  of  which  4  Whitney  Arms  Co.  v.  Barlow,  63 
has  been  paid  in  in  cash,  patent  rights  N.  Y.  62. 

merchandise,    machinery,    accounts, 


134  THE   LAW    OF   CORPORATIONS. 

The  report  must  be  made  within  twenty  days  after 
the  first  day  of  January.  Making  and  filing  a  report  be- 
fore that  date  is  not  sufficient.1 

It  is  no  excuse  for  not  making  the  report  that  the 
company  has  not  commenced  business; 2  nor  that  it  is 
closing  up  its  affairs. 3  But  if  the  corporation  has  never 
commenced  business,  and  before  the  time  for  making  the 
report  the  object  for  which  it  was  formed  becomes  im- 
possible of  accomplishment  and  there  is  neither  ability 
nor  intention  to  prosecute  business,  it  is  not  required  to 
make  such  report." 

And  if,  before  the  time  for  filing  the  annual  report, 
a  company  becomes  insolvent  and  its  property  is  sold 
out  under  an  execution,  or  a  receiver  of  all  its  property 
is  appointed,  the  corporation  becomes  so  far  dissolved  that 
the  duty  to  file  an  annual  report  no  longer  exists.5  So  where 
the  business  was  discontinued  and  not  resumed  and  no  debts 
were  contracted  and  no  elections  held,  and  the  corporation 
had  no  trustees  or  officers  who  could  manage  its  affairs,  it 
was  held  that  it  was  practically  abandoned,  if  not  technically 
dissolved,  and  that  the  statutory  requirement  of  making  a 
report  did  not  apply.6 

Publishing  and  Filing. — The  report  must  be  published 
in  some  newspaper  published  in  the  town,  city  or  village,  or  if 
there  be  no  newspaper  published  in  such  town,  city  or  vil- 
lage, then  in  some  newspaper  published  nearest  the  place 
where  the  business  of  the  company  is  carried  on,  and  must 
be  filed  in  the  office  of  the  clerk  of  the  county  where  the 
business  of  the  company  is  carried  on.7 

Where  no  paper  is  published  in  the  town,  city  or  village 


1  Cincinnati       Cooperage      Co.       v.  Huguenot  Nat.  Bank  v.  Studwell,  74 
O'Keefe,  44  Hun,  64.  id.  621;   Bonnell  v.  Griswold,  So  id. 

2  Jones  v.  Barlow,  62  N.  Y,  202.  12S;  Bruce  v.  Piatt,  id.  379. 

3  Sanborn  v.  Lefferts,  58  N.  Y.  179.  6  Losee  v.   Bullard,   79   N.  Y.  404. 

4  Kirkland  v.  Kille,  99  N.  Y.  390.  '  Laws  of  1848,  chap.  40,  §  12,  as 
6  Garrison  v.  Howe,  17  N.  Y.  458;  amended  by  Laws  of  1875,  chap.  510. 


THE   DUTIES   OF   OFFICERS   AND   DIRECTORS.  1 35 

where  the  company  carries  on  its  business,  it  is  not  essential 
that  it  select  a  newspaper  nearest  its  own  office  or  works. 
The  town,  city  or  village  is  the  "place"  of  business  within 
the  meaning  of  the  statute,  and  a  publication  in  a  newspaper 
published  nearer  to  a  point  in  the  town  than  any  other  news- 
paper is  to  the  same  point  is  a  substantial  compliance  with 
the  statute,  although  some  other  newspaper  may  be  nearer 
to  some  other  point  in  the  town.1 

If  a  company  prepares  its  report  within  the  twenty  days 
limited  by  the  statute,  the  filing  and  publication  may  be 
within  a  reasonable  time  thereafter.  The  words  "  make  a 
report  "  refer  to  the  preparation,  signing  and  verification, 
the  provisions  as  to  filing  and  publishing  being  directory 
merely.  Where,  therefore,  the  publishing  and  filing  follow 
within  what  under  the  circumstances  would  be  a  reasonable 
time,  it  Will  be  sufficient  even  though  the  twenty  days  have 
expired.2 

The  provisions  of  the  Manufacturing  Act  are  followed, 
and  the  foregoing  decision,  are  also  applicable  in  regards  to 
the  annual  reports  of  building  companies.3  and  gas-light 
companies.1 

Certificate  of  Payment  of  Stock. — Within  thirty  days  after 
the  payment  of  the  last  instalment  of  the  capital  stock  fixed 
and  limited  by  a  company,  the  president  and  a  majority  of 
the  trustees  must  make,  sign,  and  swear  to  a  certificate  stat- 
ing the  amount  of  capital  so  fixed  and  paid  in,  and  within 
the  said  thirty  days  they  must  record  the  same  in  the  office 
of  the  county  clerk  of  the  county  wherein  the  business  of  the 

1  Cameron    v.    Seaman,   69  N.    Y.  Court  of  Appeals,  in  reversing  a  judg- 

396.  merit  in  favor  of  plaintiff,  said  that 

'-'  Id. ;  Bulh-r  v.  Smalley,  101  N.  Y.  such  an  order  did  not  relieve  the  de- 

71.    In  the  latter  case  the  report  was  fendant,   but  held   that  whether    the 

not   filed  until   the  13th  of  February,  report  was  filed  within   a   reasonable 

and  an  order  was  obtained  on  that  time  would  depend  upon  the  circum- 

day    that  the  report  should  be   filed  stances  of  the  case. 

nunc  pro   tunc&s   of   January   iSth,  3  Laws  of  1853,  chap.  117,  >  12. 

the  date,  on  which  it  was  made.   The  4  Laws  of   1S4S.  chap.  37,  ^  12. 


I36  THE   LAW    OF   CORPORATIONS. 

company  is  carried  on.1     If  any  of  the  capital  stock  is  issued 
for  property,  the  certificate  must  so  state.2 

Such  a  certificate  must  also  be  made  upon  any  increase 
in  the  amount  of  capital  stock.3 

The  provision  as  to  recording  the  certificate  is  directory 
merely,  and  where  a  certificate  is  made  and  given  to  a  county 
clerk  for  record,  the  duty  imposed  by  the  statute  is  per- 
formed.4 

It  will  be  noticed  that  this  certificate  must  be  signed  and 
sworn  to  by  the  president  and  a  majority  of  the  trustees,  in 
this  respect  differing  from  the  annual  report,  which  must  be 
signed  by  the  president  and  a  majority  of  the  trustees  and 
verified  by  the  oath  of  the  president  or  secretary. 

Reports  of  Business  Corporations. —  Annual  Report.  —  Every 
corporation  organized  under  the  Business  Act  must  annually, 
within  twenty  days  after  the  first  day  of  January,  or,  in  case 
of  such  corporation  doing  business  without  the  United 
States,  then  within  twenty  days  after  the  first  day  of  April, 
make  a  report,  as  of  the  said  first  day  of  January,  which  shall 
state  the  amount  of  capital  and  the  proportion  actually  paid 
in,  the  amount  and,  in  general  terms,  the  nature  of  its  exist- 
ing assets  and  debts,  and  the  names  of  its  then  stockholders, 
and  the  dividends,  if  any,  declared  since  its  last  report ;  which 
report  must  be  signed  by  the  president  and  a  majority  of 
the  directors,  and  verified  by  the  oath  of  the  president  or 
secretary  of  such  corporation,  and  filed  in  the  office  of  the 
secretary  of  state.  And  any  corporation  doing  business 
without  the  United  States  will  still  be  required  to  make 
such  report  within  twenty  days  after  the  first  day  of  January 
in  each  year,  unless  such  corporation  shall  make  and  file  in 
the  office  of  the  secretary  of  state  within  twenty  days  after 
the  first  day  of  January  in  each  year  a  certificate,  verified  by 
the  oath  of  the  president,  secretary,  or  treasurer  of  such  cor- 


>  Laws  of  1848,  chap.  40,  §11.  3  Veeder  v.  Mudgett,  95  N.  Y.  2Q3. 

'•'  Laws    of  1S53,  chap.  333,  §  2.  4  Id. 


THE    DUTIES    OF   OFFICERS    AND    DIRECTORS.  1 37 

poration,  stating  that  said  corporation  is  at  the  date  of  such 
certificate  doing  business  without  the  United  States.1 

This  section,  in  terms,  requires  the  report  to  be  filed  with 
the  secretary  of  state  (instead  of  the  county  clerk,  as  in  the 
Manufacturing  Act),  and  the  amount  and  nature  of  its  exist- 
ing assets,  as  well  as  debts,  and  the  names  of  its  then  stock- 
holders, and  the  dividends,  if  any,  declared  since  its  last 
report,  to  be  stated.  It  must  be  made  although  a  year  has 
not  elapsed  since  the  organization  of  the  corporation,  as 
was  formerly  held  under  the  Manufacturing  Act."  But  it 
does  not  require  the  publication  of  the  report.  The  decis- 
ions cited  under  that  act  as  to  the  persons  by  whom  it  should* 
be  executed,  and  probably  as  to  the  directory  character  of 
the  requirement  as  to  filing,  would  be  equally  applicable  to 
this  section. 

Certificate  of  Payment  of  Capital  Stock. — The  directors  of 
every  such  company,  within  thirty  days  after  the  payment 
of  the  last  instalment  of  the  capital  stock,  shall  make  a  cer- 
tificate stating  the  amount  of  the  capital  so  paid  in,  which 
certificate  must  be  signed  and  sworn  to  by  the  president  and 
a  majority  of  the  directors  ;  and  they  must  within  the  said 
thirty  days  record  the  same  in  the  office  of  the  secretary  of 
state,  and  of  the  county  in  which  the  principal  business  office 
of  such  corporation  is  located.3 

Reports  of  Marine  Insurance  Companies. —  It  is  the  duty  of 
the  president,  or  vice-president,  and  secretary  of  each  marine 
insurance  company  incorporated  by  or  organized  under  any 
law  of  this  state,  annually  on  the  first  day  of  January,  or 
within  one  month  thereafter,  to  prepare  under  their  own 
oath,  and  deposit  in  the  office  of  the  Insurance  Department, 
a  statement  of  the  condition  and  affairs  of  such  company  for 
the  year  ending  on  the  thirty-first  day  of  December  then 
next  preceding,  exhibiting  the  total  amount  of   premiums 

1  Laws  of  1S75,  chap.  611,  §  iS,  as  2  Garrison  v.  Howe,  17  X.  Y.  458. 

amended  by  Laws  of  iSS-j,  chap.  20S.  *  Laws  of  1S75,  chap.  611.  §  37. 


I38  THE    LAW   OF   CORPORATIONS. 

received  and  the  total  amount  of  losses  paid  and  ascertained, 
including  expenses  during  the  year ;  also  the  amount  of 
debts  owing  by  the  company  at  the  date  of  the  statement, 
and  the  amount  of  claims  which  then  exist  against  the  com- 
pany for  losses  accrued,  showing  what  amount  is  payable 
on  demand,  what  amount  is  considered  fair  or  legal,  the  pay- 
ment of  which  has  not  then  matured,  and  what  amount  is 
resisted  on  account  of  alleged  fraud,  or  for  which  the  company 
do  not  consider  themselves  legally  liable ;  also  a  statement 
of"  the  securities  representing  the  capital  stock  and  all  funds 
of  the  company,  and  also  whether  any  of  the  securities  held 
or  owned  by  such  company  are  considered  bad  or  doubtful, 
and  if  so,  specifying  the  amount  of  such  securities  and  the 
gross  amount  of  outstanding  risks  thereon  ;  and  exhibiting 
also  the  assets  and  liabilities  of  the  company,  its  income  and 
expenditures  during  the  year,  scrip  issued  and  redeemed, 
and  other  miscellaneous  items,  in  such  form  and  manner  as 
may  from  time  to  time  be  prescribed  by  the  Superintendent 
of  the  Insurance  Department,  who  may  make  such  changes 
in  the  form  of  such  annual  statement  as  shall  seem  to  hirn 
best  adapted  to  elicit  from  such  companies  a  true  exhibit  of 
their  condition,  situation  and  affairs.1 

Reports  of  Fire  and  Inland  Navigation  Insurance  Companies. — It 
is  the  duty  of  the  president,  or  vice-president,  and  secretary 
of  such  companies  annually  on  the  first  day  of  January,  or 
within  one  month  thereafter,  to  prepare  under  their  own 
oath,  and  deposit  in  the  office  of  the  Superintendent  of  the 
Insurance  Department,  a  statement  of  the  condition  of  such 
company  on  the  thirty-first  day  of  December  then  next 
preceding,  exhibiting  the  following  facts  and  items  : 

First.  The  amount  of  the  capital  stock  of  the  company. 

Second.  The  property  or  assets  held  by  the  company. 

Third.  The  liabilities  of  the  company. 

Fourth.  The  income  of  the  company  during  the  preced- 
ing year. 

1  Laws  of  1849,  chap.  30S,  §  13,  as  amended  by  Laws  of  1864,  chap.  425. 


THE    DUTIES    OF   OFFICERS    AND    DIRECTORS.  1 39 

Fifth.  The  expenditures  during  the  preceding  year. 

These  reports  are  required  in  great  detail,  and  printed 
forms  of  the  statement  are  furnished  by  the  Superintendent 
of  the  Insurance  Department,  who  may  make  such  changes 
in  the  form  of  such  statements  as  may  seem  to  him  best 
adapted  to  elicit  from  the  companies  a  true  exhibit  of  their 
condition  in  respect  to  the  several  points  enumerated.  He 
is  also  empowered  to  address  any  inquiries  to  any  insurance 
company  in  relation  to  its  doings  or  condition,  or  any  other 
matter  connected  with  its  transactions.  A  failure  to  make 
and  deposit  such  statement,  or  to  reply  to  any  inquiry  of  the 
Superintendent  of  the  Insurance  Department,  will  subject 
the  company  to  a  penalty  of  five  hundred  dollars,  and  an 
additional  five  hundred  dollars  for  every  month  that  such 
company  shall  continue  thereafter  to  transact  any  business 
of  insurance.1 

Reports  of  Life,  Health,  and  Casualty  Insurance  Companies. — It  is 
the  duty  of  the  president  or  vice-president,  and  secretary  or 
actuary,  or  a  majority  of  the  trustees  of  each  of  such  com- 
panies organized  under  the  laws  of  this  state,  annually  on  the 
first  day  of  January,  or  within  sixty  days"  thereafter,  to  prepare 
under  oath,  and  deposit  in  the  office  of  the  Superintendent 
of  the  Insurance  Department,  a  statement  showing  the  num- 
ber of  policies  issued  during  the  year,  the  amount  of  insur- 
ance effected  thereby,  the  amount  of  premiums  received,  the 
amount  of  interest  and  all  other  receipts;  the  amount  of 
losses  paid  during  the  year,  and  the  amount  unpaid  ;  the 
amount  of  expenses  ;  the  whole  number  of  policies  in  force  ; 
the  amount  of  liabilities  or  risks  thereon,  and  all  other  lia- 
bilities ;  the  amount  of  capital  stock  ;  the  amount  of  accu- 
mulation ;  the  amount  of  assets,  and  manner  in  which  they 
are  invested  ;  the  amount  of  dividends  paid  and  unpaid  ; 
and  a  tabular  statement  of  the  policies  in  force  during  each 

1  Laws  of  1853,  chap.  466,  §  22,  as       chap.  366,  §  3,  as  amended  by  Laws 
amended  by  Laws  of  1854,  chap.  369,        of  1S66,  chap.  514. 
and  as  modified    by    Laws  of  1859, 


I40  THE    LAW    OF    CORPORATIONS. 

year  of  the  existence  of  the  company  up  to  the  time  of  mak- 
ing such  statement. 

The  Superintendent  of  the  Insurance  Department  will 
furnish  to  each  company  required  to  make  such  reports 
printed  forms  of  the  statements  required,  and  he  may  make 
such  changes  from  time  to  time  in  the  form  of  the  same  as 
may  seem  to  him  best  adapted  to  elicit  from  such  companies 
a  true  exhibit  of  their  condition  in  respect  to  the  several 
points  above  enumerated.1 

'  Reports  of  Guaranty  Companies. — Title  guaranty  companies 
and  credit  guaranty  companies  are  required  to  make  an- 
nual reports  to  the  Superintendent  of  the  Insurance  Depart- 
ment, on  the  first  day  of  January  of  each  year,  or  within 
one  month  thereafter,  of  a  form  substantially  like  that  of 
the  reports  of  fire-insurance  companies.2  It  is  the  duty  of 
the  president,  or  vice-president,  and  secretary  of  such  cor- 
porations to  prepare  under  their  oath,  and  deposit  in  the  of- 
fice of  the  Superintendent  of  the  Insurance  Department,  a 
statement  of  the  condition  of  such  corporations  on  the 
thirty-first  day  of  December  next  preceding,  exhibiting  the 
following  facts  and  items  in  detail : 

First.  The  amount  of  capital  stock  and  the  proportion 
actually  paid  in. 

Second.  The  property  or  assets  held  by  the  corporation. 

Third.   The  liabilities  of  the  corporation. 

Fourth.  The  income  of  the  corporation  during  the  pre- 
ceding year. 

Fifth.   The  expenditures  during  the  preceding  year. 

The  Superintendent  of  the  Insurance  Department  has 
the  same  power  in  regard  to  changing  the  form  of  such  an- 
nual statements  and  making  additional  inquiries  as  in  the 
case  of  fire  and  life  insurance  companies.3 

1  Laws  of   1S53,  chap.  463,  §12,  as  chap.  514.' 
modified  by  Laws  of  1866,  chap.  843,  i  Ante,  p.  13S. 

and    by    Laws    of    1859,    chap.    366,  3  Laws    of    1SS5,    chap.    533,  §  18, 

§  3,    as    amended   by   Laws  of  1S66,  and  Laws  of  1SS6,  chap.  611,  J;  16. 


THE   DUTIES   OF   OFFICERS   AND   DIRECTORS.  141 

Reports  of  Banks — The  Superintendent  of  the  Banking 
.Department  will,  at  least  once  in  each  quarter  of  a  year,  fix 
and  designate  some  Saturday  in  such  quarter  in  respect  to 
which  quarterly  reports  shall  be  made  ;  and  it  is  the  duty 
of  every  incorporated  bank  or  banking  association  in  the 
state,  on  or  before  the  first  days  of  February,  May,  Au- 
gust and  November  of  each  year,  to  make  and  transmit  to 
the  Superintendent  a  quarterly  report,  which  report  must 
be  made  on  the  oath  of  the  president  and  cashier,  and 
contain  a  true  statement  of  the  condition  of  such  bank  or 
banking  association  on  the  morning  of  the  day  specified  by 
the  Superintendenc  next  preceding  the  date  of  such  report, 
in  respect  of  the  following  items  and  particulars,  namely  : 
loans  and  discounts  ;  over-drafts  due  from  banks,  due  from 
the  directors  of  the  bank  or  banking  association  mak- 
ing the  report,  due  from  brokers  ;  real  estate,  specie,  cash 
items,  stock  and  promissory  notes,  bills  of  solvent  banks, 
bills  of  suspended  banks,  loss  and  expense  account, capital, 
circulation  (distinguishing  that  received  from  the  Superin- 
tendent from  the  old  outstanding  bills),  forfeits,  amount 
due  to  banks,  amount  due  to  individuals  and  corporations 
other  than  banks,  amount  due  to  the  treasury  of  the  state, 
amount  due  to  Commissioners  of  Canal  Fund,  amount  due 
to  depositors  on  demand,  amount  due  not  included  under 
either  of  the  above  heads. 

Such  reports,  in  addition  to  publication  by  the  Superin- 
tendent of  the  Banking  Department  in  the  newspaper  in  Al- 
bany designated  for  such  purposes,  must  be  published  in  a 
newspaper  published  in  the  city  or  town  in  which  such  bank 
is  situated,  or  if  there  be  no  such  paper,  in  a  newspaper  pub- 
lished in  the  county.1 

In  case  of  the  neglect  of  a  bank  to  make  such  report 
within  five  days  from  the  mailing  of  a  notice  by  the  Super- 
intendent of  the  Banking  Department,  he  will  cause  an  ex- 

1  Laws  of  1882,  chap  409,  §  20. 


142  THE   LAW    OF   CORPORATIONS. 

amination  of  the  affairs  of  such  bank  to  be  made  and  charge 
the  expense  to  the  bank,  and  it  is  his  duty  to  prose- 
cute such  bank  in  any  court  of  record  and  recover  the  sum 
of  one  hundred  dollars  for  such  neglect  or  refusal.'  And  if 
such  bank  fails  to  furnish  such  report  in  time  for  publica- 
tion by  the  Superintendent  of  the  Banking  Department,  it 
shall  forfeit  the  sum  of  one  hundred  dollars  ;  and  if  it  shall 
neglect  or  refuse  to  make  the  quarterly  report  for  two  suc- 
cessive quarters,  it  shall  forfeit  its  charter.2 

'  Every  such  banking  company  or  association  must,  on  or 
before  the  first  day  of  September  of  each  year,  cause  to  be 
published  for  six  successive  weeks  in  one  public  newspaper 
printed  in  the  county  in  which  such  company  or  association 
may  be  located,  and  in  the  state  paper,  a  true  and  accurate 
statement,  verified  by  the  oath  of  the  cashier,  treasurer  or 
presiding  officer,  of  all  deposits  made  with  such  company  or 
association,  and  of  all  dividends  and  interest  declared  and 
payable  upon  any  of  the  stock,  bonds  or  other  evidence  of 
indebtedness  of  such  company  or  association  which  at  the 
date  of  such  statement  shall  have  remained  unclaimed  by 
any  person  or  persons  authorized  to  receive  the  same  for 
two  years  then  next  preceding.3 

Such  statement  must  set  forth  the  time  that  every  such 
deposit  was  made,  its  amount,  the  name,  and  residence  if 
known,  of  the  person  making  it,  the  name  of  the  person  in 
whose  favor  the  dividend  may  have  been  declared  or  inter- 
est accrued,  its  amount,  and  upon  what  number  of  shares 
and  on  what  amount  of  stock,  bonds  or  other  evidence  of 
indebtedness  of  any  such  company  or  association/ 

Every  report  directed  to  be  made  by  any  law  of  this 
state  from  such  an  association  must  be  verified  by  the  oath 
of  the  president  and  cashier  of  such  association  that  the 
usual  business  of  such  association  has  been  transacted  at  the 


1  Laws  of  1882,  chap.  409,  §  21.  3  Id.  §  25. 

s  Id.  8  22.  4  Id.  §  26. 


THE   DUTIES    OF   OFFICERS   AND    DIRECTORS.  143 

location  designated   as  its   place  of   business  and  not  else- 
where.1 

It  seems  that  notes  discounted  at  a  place  other  than  the 
usual  place  of  business  would  be  void.3 

Reports  of  Safe  Deposit  Companies. — All  companies  organ- 
ized under  the  laws  of  this  state  for  the  safe-keeping  and 
guaranteeing  personal  property  must  semi-annually  make  a 
full  report  in  writing  of  the  affairs  and  conditions  of  such 
corporations  at  the  close  of  business  on  the  last  business  days 
of  June  and  December  in  each  year  to  the  Superintendent 
of  the  Banking  Department,  verified  by  oath,  in  such  form 
and  by  such  officers  of  such  corporations  as  the  Superinten- 
dent may  designate,  which  report  shall  be  in  place  of  any 
report  which  any  such  corporation  was  previously  required 
to  make  to  the  Supreme  Court,  the  comptroller  or  other- 
wise. 

Every  such  report  must  be  made  within  twenty  days 
after  the  day  to  which  it  relates,  and  must  be  in  such  form 
and  contain  such  statements,  returns  and  information  as  the 
Superintendent  may  from  time  to  time  prescribe  or  require  ; 
and  he  may,  if  he  be  of  the  opinion  that  it  is  desirable,  re- 
quire that  a  like  report,  either  wholly  or  in  part  as  to  the 
particulars  above  mentioned,  be  made  to  -him  at  any  time 
by  any  such  corporation,  within  such  period  as  he  may  des- 
ignate.3 

Reports  of  Trust  Companies. — It  is  the  duty  of  the  trustees 
of  every  trust  company,  by  a  committee  of  not  less  than 
three  of  such  trustees,  on  or  about  the  first  days  of  January 
and  July  in  each  year,  to  thoroughly  examine  the  books, 
vouchers  and  assets  of  such  trust  company  and  its  affairs 
generally  ;  and  the  statement  or  schedule  of  assets  reported 
to  the  Superintendent  of  the  Banking  Department  for  the 
first  days  of  January  and  July  in  each   year   shall   be   based 

1  Laws  of  18S2,  chap.  409,  §  28.        ?  Potter  v.  Bank  of  Ithaca,  7  Hill,  530. 
3  Laws  of  1875,  chap.  613,  §  10. 


144  THE   LAW    OF   CORPORATIONS. 

upon  such  examination  ;  but  this  shall  not  be  construed  as 
prohibiting  such  trustees  from  requiring  such  examination 
at  such  other  times  as  they  may  prescribe.1 

Such  statements  must  be  verified  by  the  oaths  of  a  ma- 
jority of  the  trustees  who  make  the  examination.2 

Reports  of  Railroad  Companies. —  Every  corporation  owning, 
leasing  or  operating  a  railroad  or  railroad  cars  wholly  or  par- 
tially within  this  state  is  required  to  make  an  annual  report 
to  the  Board  of  Railroad  Commissioners  of  its  operations 
for  the  year  ending  with  the  thirtieth  day  of  June  of  each 
year,  and  of  its  condition  on  that  day,  in  accordance  with 
the  forms  prescribed  by  such  Board.  The  report  must  be 
verified  by  oath  of  the  president  or  treasurer  and  the  gen- 
eral manager  or  acting  superintendent,  and  must  be  filed  in 
the  office  of  the  Board  of  Railroad  Commissioners  by  the 
first  day  of  September.  Such  corporation  must  also  make 
a  quarterly  report  for  the  quarters  ending  on  the  last  of 
September,  December,  March  and  June  in  each  year,  in  ac- 
cordance with  the  forms  prescribed  by  the  Board  of  Rail- 
road Commissioners,  and  such  reports  must  be  filed  in  the 
office  of  the  Board  within  six  weeks  from  the  date  of  the 
expiration  of  the  quarter/ 

Any  such  corporation  failing  to  make  such  annual  and 
quarterly  reports  within  the  time  above  prescribed,  or  fail- 
ing to  correct  such  report  within  ten  days  after  notice  by 
the  Board  of  Railroad  Commissioners,  is  liable  to  a  penalty 
of  two  hundred  and  fifty  dollars,  and  an  additional  penalty 
of  twenty-five  dollars  for  each  day's  neglect;  but  the  Board 
of  Railroad  Commissioners  may  extend  the  time  so  limited 
for  causes  shown.4 

Reports  of  Bridge  Companies. —  It  is  the  duty  of  the  president 
and  secretary  of  bridge  companies  to  report  annually  to  the 

'  Laws  of  18S7,  chap.   546,  §  32.  98,  §  1. 

2  Id.  §  33.  4  Id.  §  32,  as  amended  by  Laws  of 

3  Laws  of  1850,  chap.  140,  §  31,  as  1890,  chap.  98,  §  2. 
amended    by    Laws    of    1890,    chap. 


THE   DUTIES   OE   OFFICERS   AND    DIRECTORS.  145 

state  engineer  and  surveyor,  and  the  county  clerk  where 
the  papers  are  filed,  under  oath,  the  cost  of  their  bridge;  the 
amount  of  all  money  expended  ;  the  amount  of  their  capital 
stock,  and  how  much  paid  in,  and  how  much  actually  ex- 
pended ;  the  amount  received  during  the  year  for  tolls,  and 
from  all  other  sources,  stating  each  separately;  the  amount 
of  dividends  made,  and  the  amount  of  indebtedness  of  such 
company,  specifying  the  object  for  which  the  indebtedness 
accrued  ;  and  such  other  particulars  in  respect  to  the  busi- 
ness affairs  of  such  corporation  as  the  state  engineer  and 
surveyor,  or  the  legislature,  or  either  branch  thereof,  re- 
quire to  be  so  reported.' 

Such  reports  must  be  made  in  the  month  of  January, 
and  must  show,  in  respect  to  the  particulars  required  to  be 
set  forth,  the  affairs  and  business  of  such  corporation  at  the 
close  of  the  year  ending  on  the  thirty-first  da)-  of  December 
next  preceding  the  time  of  making,  and  must  be  published 
in  the  nearest  newspaper  four  weeks.  Any  corporation  neg- 
lecting to  make  such  report  shall  forfeit  to  the  people  of  the 
state  for  every  such  neglect  the  sum  of  two  hundred  dol- 
lars, and  for  every  week  such  corporation  shall  neglect  to 
make  such  report  after  the  time  within  which  it  is  required 
to  be  made  it  shall  forfeit   the   further   sum  of  fifty  dollars.2 

Reports  of  Ferry  Companies — The  directors  of  ferry  com- 
panies must  at  each  annual  meeting  of  the  stockholders,  and 
at  every  special  meeting  where  directors  are  to  be  elected, 
submit  to  the  stokholders  a  report  showing  the  amount  of 
capital  stock  of  the  company  actually  paid  in,  the  property 
and  effects  of  the  company  on  hand,  the  debts  due  from  the 
company,  and  the  names  and  places  of  residence  of  the 
stockholders  as  nearly  as  the  same  can  be  ascertained  ;  and 
must,  within  ten  days  thereafter,  cause  such  report,  with  an 
affidavit  sworn  to  by  a  majority  of  them,  to  be  filed  in  the 

'  Laws  of  1848,  chap.  259,  §  16.  2  Id.  §  19. 


I46  THE   LAW   OF   CORPORATIONS. 

offices   in  which   the  original    certificates    of   incorporation 
have  been  filed.1 

Reports  of  Guano  Companies. — Every  such  company  must 
annually,  within  twenty  days  from  the  first  day  of  January, 
make  a  report,  which  shall  be  published  in  two  daily  news 
papers  in  the  county  where  the  principal  office  of  the  com- 
pany is  located,  which  shall  set  forth  the  number  of  shares 
of  full-paid  stock  issued  ;  the  number  of  shares  the  avails  of 
which  have  been  used  for  the  purchase  of  real  estate  and 
guano  islands  ;  the  number  of  shares  on  which  instalments 
are  due  and  unpaid,  and  the  amount  of  the  same  ;  the  num- 
ber of  shares  held  and  owned  by  the  company,  and  the 
amount  actually  employed  as  working  capital ;  and  the  names 
and  residences  of  the  stockholders,  and  the  number  of 
shares  held  by  each. 

This  report  must  be  signed  by  the  president  and  a  ma- 
jority of  the  trustees,  and  verified  by  the  oath  of  the  presi- 
dent and  secretary,  and  copies  filed  in  the  offices  where  the 
original  certificates  were  filed.2 

Reports  of  Inland  Navigation  Companies. — Such  corporations 
must  make  an  annual  report  to  the  state  engineer  and  sur- 
veyor of  the  operations  of  the  year  ending  December  15th, 
which  report  must  be  verified  by  the  oaths  of  the  treasurer 
or  president,  and  be  filed  in  the  office  of  the  state  engineer 
and  surveyor  by  the  fifteenth  day  of  January  in  each  year, 
and  shall  state  the  amount  of  capital  by  charter  ;  the  amount 
of  stock  subscribed  ;  the  amount  of  stock  paid  in  at  the  time 
of  reporting  ;  the  amount  of  floating  debt  of  the  company, 
and  whether  the  same  be  secured  by  mortgage  of  their  prop- 
erty ;  the  number  of  boats,  and  the  nature  of  the  same,  owned 
by  the  company ;  the  waters  upon  which  they  do  business ; 
the  average  number  of  men  employed  by  the  company  during 
the  year  ;  the  gross  receipts  of  the  year  for  freight  ;  the  gross 
receipts  from  other  sources  ;  the  dividends  on  stock,  amount 

1  Laws  of  1853,  chap.  135,  £  16.  °  Laws  of  1857,  chap.  546,  §  12. 


THE   DUTIES   OF   OFFICERS   AND   DIRECTORS.  147 

and  rate  per  cent.  ;  the  amount  paid  for  damage  to  or  for  loss 
of  freight;  the  amount  paid  for  new  moving  stock,  including 
all  expenditures  for  the  purchase  of  new  outfits  for  the  busi- 
ness of  the  company  ;  the  amount  charged  to  depreciation  of 
their  property  used  in  the  business  of  transportation  ;  the 
place  of  the  principal  office  of  the  company.' 

Reports  of  Skating-Park  Associations It    is   the   duty  of   the 

president  and  secretary  of  every  such  corporation  to  report 
annually  to  the  state  engineer  and  surveyor  and  the  county 
clerk  in  whose  office  the  certificate  of  incorporation  is  filed, 
under  oath,  the  cost  of  their  ground,  the  amount  of  all 
money  expended,  the  amount  received  during  the  year  from 
subscriptions  and  from  all  other  sources,  stating  each  sepa- 
rately, the  amount  of  dividends  made,  and  the  amount  of 
indebtedness  of  such  company,  specifying  the  object  for 
which  the  indebtedness  accrued,  and  such  other  particulars 
in  respect  to  the  business  affairs  of  such  corporation  as  the 
state  engineer  and  surveyor  or  either  branch  of  the  legisla- 
ture may  require  to  be  so  reported.2 

Reports  of  Driving-Park,  Park  and  Agricultural  Associations. — 
The  president,  secretary,  and  treasurer  of  every  such  associ- 
ation must  annually  prepare  a  full  statement  of  the  receipts 
and  expenditures  of  such  association  during  the  year  preced- 
ing the  day  of  the  annual  election,  with  a  schedule  of  its 
property,  debts,  and  obligations,  which  statement  and  sched- 
ule must  be  verified  by  the  affidavits  of  two  of  said  officers, 
and  must  be  filed  in  the  county  clerk's  office  of  the  county 
in  which  such  association  is  located  within  one  week  after 
such  annual  election,  and  otherwise  published  as  the  by-laws 
of  the  association  may  prescribe.3 

Reports  of  Pipe-Line  Companies J  font  III)1  Statc'l/h'llts. — It    is 

the  duty  of  every  such  corporation  to  make  monthly  a  spe- 
cific statement  showing  the  amount  of  all  commodities  re- 


1  Laws  of  i?54,  chap.  232,  §  24.  3  Laws  of  1S72,  chap.  248,  §  10. 

2  Laws  of  1861,  chap.  149,  g  9. 


148  THE   LAW   OF   CORPORATIONS. 

ceived,  the  amount  delivered  during  the  month,  and  the 
stock  on  hand  on  the  last  day  of  each  month  of  the  year, 
and  how  much  of  said  stock  is  represented  by  outstanding 
certificates,  vouchers,  receipts  or  orders,  and  how  much  in 
credit  balances  on  the  books  of  the  corporation.  Such 
statement  must  be  made  on  or  before  the  tenth  day  of  the 
succeeding  month,  and  sworn  to  by  the  president  and  sec- 
retary of  the  corporation  that  the  same  is  in  all  respects  true 
and  correct,  and  must  be  filed,  within  three  days  thereafter, 
in  the  county  clerk's  office  in  the  county  where  the  princi- 
pal office  of  such  corporation  is  located,  and  a  true  copy  of 
the  same  posted  in  a  conspicuous  place  in  the  office  of  such 
corporation  for  at  least  thirty  days  thereafter.1 

Same.— Annual  Reports. — It   is  the  duty  of  the  president 
and  secretary  of  such  corporations  to  report  annually  in  the 
month    of  January  in    each  year  to  the  state  engineer  and 
surveyor,  under  oath,  the  amount  of  the  capital  stock  of  the 
company ;   the   amount  actually  paid  in  ;  the  amount  of  all 
money  expended  during  the  year  ending  on   the  thirty-first 
day  of  December  next  preceding  the  time  of  making  such 
report,  specifying  the  purposes  for  which  such  moneys  have 
been  expended  ;  the  amount  received  during  such  year  from 
all    sources,  specifying    such    sources  ;  the    amount  of  divi- 
dends made  ;  the  amount  of  the  indebtedness  of  such  com- 
pany, stating  the  object  for  which  the  indebtedness  accrued  ; 
a  detailed   statement   of  all  the  property  of  such  company, 
stating  the  nature  and  value  thereof;  and  such  other  partic- 
ulars in  respect  to  the  business  affairs  of  such  company  as 
the  state  engineer  and  surveyor,  or  the  legislature,  or  either 
branch  thereof,  require  to  be  so  reported. 

Any  such  corporation  which  shall  neglect  to  make  such 
report  shall  forfeit  to  the  people  of  this  state,  for  every 
such  neglect,  the  sum  of  two  hundred  dollars  ;  and  for  every 
week  such  corporation   shall  neglect  to  make  such  report 

1  Laws  of  1878,  chap.  203,  §  41. 


THE   DUTIES   OF   OFFICERS   AND   DIRECTORS.  149 

after  the  expiration  of  the  time  within  which  it  is  required 
to  make  the  same,  it  shall  forfeit  the  further  sum  of  fifty 
dollars.1 

Reports  of  Turnpike  and  Plank-Road  Companies. — It  is  the  duty 

of  the  directors  of  every  such  company  to  report  annually 
to  the  secretary  of  state,  Under  the  oath  of  any  two  of  such 
directors,  the  cost  of  their  road  ;  the  amount  of  all  money 
expended  ;  the  amount  of  their  capital  stock,  and  how  much 
paid  in,  and  how  much  actually  expended  ;  the  whole  amount 
of  tolls  or  earnings  expended  on  such  road  ;  the  amount  re- 
ceived during  the  year  for  tolls  and  from  all  other  sources, 
stating  each  separately  ;  the  amount  of  dividends  made,  and 
the  amount  set  apart  for  a  reparation  fund  ;  and  the  amount 
of  indebtedness  of  such  company,  specifying  the  object  for 
which  the  indebtedness  accrued.2 

Reports  of  Certain  Moneyed  Corporations.  —  Every  trust,  loan, 
mortgage,  security,  guarantee  or  indemnity  company  or  as- 
sociation, and  every  corporation  or  association  having  the 
power  and  receiving  money  on  deposit,  existing  or  incorpo- 
rated under  any  law  of  this  state,  or  any  corporation  or  as- 
sociation not  incorporated  under  the  laws  of  this  state  which 
receives  deposits  of  money  or  assumes  obligations  in  this 
state  (other  than  banks,  institutions  for  savings  and  insur- 
ance companies),  must  semi-annually  make  a  full  report  in 
writing  of  the  affairs  and  conditions  of  such  corporation 
at  the  close  of  business  on  the  last  business  days  of  June 
and  December  in  each  year  to  the  Superintendent  of  the 
Banking  Department,  verified  by  oath,  in  such  form  and  by 
such  officers  of  the  corporation  as  the  Superintendent  may 
designate,  which  report  shall  be  in  place  of  any  report  which 
any  such  corporation  has  been  heretofore  required  to  make 
to  the  Supreme  Court,  the  comptroller,  or  otherwise. 

Every  such  report  must  be  made  within  twenty  days 
after  the  day  to  which  it  relates,  and  must  be  in  such  form, 

1  Laws  of  1878,  chap.  203,  §  44.  ■  Laws  of  1S47,  chap.  210,  §  41. 


150  THE    LAW   OF   CORPORATIONS. 

and  contain  such  statements,  returns  and  information  as  to 
the  affairs,  business,  condition  and  resources  of  such  cor- 
poration as  the  Superintendent  may  from  time  to  time  pre- 
scribe or  require ;  and  he  may,  if  he  be  of  the  opinion  that 
it  is  desirable,  require  that  a  like  report,  either  wholly  or  in 
part,  as  to  such  particulars,  be  made  to  him  at  any  time,  by 
any  such  corporation,  within  such  period  as  he  may  desig- 
nate.1 

Under  this  provision  it  was  held  that  a  company  whose 
charter  authorized  it  to  establish  a  public  exchange  and 
mart  for  receiving  deposits  of,  and  transferring,  earnest 
moneys,  stocks,  bonds  and  other  securities,  and  for  the  pro- 
curement and  making  of  loans  on  the  same,  and  guarantee- 
ing the  payment  of  bonds  and  other  obligations,  was  required 
to  make  such  report  to  the  Superintendent  of  the  Banking 
Department.2 

BOOKS   REQUIRED   TO   BE   KEPT. 

The  book  or  books  of  any  incorporated  company  in  this 
state  in  which  the  transfer  of  stock  is  registered,  and  the 
books  containing  the  names  of  the  stockholders,  shall  at  all 
reasonable  times  during  the  usual  hours  of  transacting  busi- 
ness be  open  to  the  examination  of  every  stockholder  of  the 
company  for  thirty  days  previous  to  any  election  of  direc- 
tors.3 

It  is  the  duty  of  the  trustees  of  every  corporation  organ- 
ized under  the  Manufacturing  Act  to  cause  a  book  to  be 
kept  by  the  treasurer  or  clerk  containing  the  names  of  all 
persons,  alphabetically  arranged,  who  are,  or  who  within  six 
years  have  been,  stockholders  of  such  company,  and  showing 
their  places  of  residence,  the  number  of  shares  of  stock  held 

1  Laws  of  1882,  chap.  409,  §  219.  3  Rev.    Stat.,   part  1.    chap,   xviii, 

2  People  v.   The  Mutual  Trust  Co.,       title  4,  §  1. 
96  N.  Y.  10. 


THE   DUTIES' OF   OFFICERS   AND    DIRECTORS.  I  5 1 

by  them  respectively,  and  the  time  when  they  respectively 
became  the  owners  of  such  shares,  and  the  amount  of  stock 
actually  paid  in.  Such  books  must,  during  the  usual  business 
hours,  be  open  for  the  inspection  of  stockholders  and  credi- 
tors of  the  company  and  their  personal  representatives,  at 
the  office  or  principal  place  of  business  of  such  company  in 
the  county  where  its  business  operations  are  located.  In 
addition  to  the  liability  incurred  by  the  officer  neglecting  or 
refusing  to  make  any  proper  entry  in  such  books,  or  to  ex- 
hibit the  same,  it  is  provided  that  a  company  that  neglects 
to  keep  such  books  open  for  inspection  shall  forfeit  to  the 
people  the  sum  of  fifty  dollars  for  every  day  it  shall  so  neg- 
lect.1 

Substantially  the  same  provisions  exist  as  to  keeping 
and  exhibiting  the  books  of  stockholders  of  the  following 
corporations  :  Business  corporations,2  building  companies,3 
hotel  companies,4  navigation  companies,5  turnpike  and  plank- 
road  companies,6  title  guarantee  companies.7 

It  is  the  duty  of  the  directors  of  business  corporations'* 
and  of  title  guarantee  companies9  to  cause  to  be  kept  at 
the  principal  office  or  place  of  business  correct  books  of 
account  of  all  business  and  transactions,  which  may  at  all 
reasonable  times  be  examined  by  any  stockholder  either  in 
person  or  by  attorney. 

The  president  and  cashier  of  every  banking  association 
organized  under  the  laws  of  this  state  are  required  to  keep 
a  true  and  correct  list  of  the  names  of  all  the  shareholders 
of  such  association,  and  to  file  a  copy  of  such  list  in  the 
office  of  the  clerk  of  the  county  where  any  office  of  such  as- 
sociation may  be  located,  and  also  in  the  office  of  the  Super- 

1  Laws  of  184S,  chap.  40,  §  25.  and  their  representatives. 

2  Laws  of  1875,  chap.  611,  §  17.  5  Laws  of  1S52,  chap.  22S,  §  IO. 
:j  Laws  of  1853,  chap.  117,  §  25.  c  Laws  of  1S47,  chap.  210,  £  43. 
4  Laws  of   1S74,    chap.    143,  §    14.  7  Laws  of  1SS5,  chap.  53S,  5;  17. 

The   right  to  examine   is  limited  to  8  Laws  of  1875,  chap.  611,  §  16. 

stockholders  and  judgment  creditors  9  Laws  of  1SS5,  chap.  538,  §  16. 


152  THE   LAW   OF   CORPORATIONS. 

intendent  of  the  Banking  Department,  on  the  first  Monday 
of  January  and  July  in  each  year.1 


Article  II. 

Acts  Prohibited. 

Generally  corporations  are  prohibited  from  exercising 
any  powers  other  than  those  expressly  given  by  law  or  in 
their  charters,  and  such  powers  as  incidentally  flow  from, 
and  are  necessary  to,  the  use  of  these.3 

BANKING   POWERS   PROHIBITED. 

No  corporation  not  expressly  incorporated  for  banking 
purposes  shall  by  any  implication  or  construction  be  deemed 
to  possess  the  power  of  discounting  bills,  notes  or  other  evi- 
dences of  debt,  of  receiving  deposits,  of  buying  gold  and  sil- 
ver, bullion  or  foreign  coins,  of  buying  and  selling  bills  of 
exchange,  or  of  issuing  bills,  notes  or  other  evidences  of 
debt,  upon  loan  or  for  circulation  as  money;3  nor  shall  it 
employ  any  of  its  funds  for  such  purposes ; 4  and  any  note 
so  discounted  will  be  void  ; '"  and  any  director  or  officer  vio- 
lating the  above  provisions  shall  forfeit  one  thousand  dollars.6 

In  The  New  York  State  Loan  and  Trust  Co.  v.  Hclmcr"' 
where  a  company  not  authorized  by  its  charter  to  carry  on 
the  business  of  banking  or  to  discount  notes,  sued  on  notes 
discounted  by  it,  on  demurrer  to  the  answers  setting  up  such 
unauthorized  banking  it  was  held  by  the  Court  of  Appeals, 
reversing  the  General  Term  of  the   Supreme  Court  in  the 

1  Laws  of  18S2,  chap.  409,  §  46.  authorized  by  law  becoming  a  mem- 

2  Ante,  p.  50.  ber  of,  or  interested  in,  any  associa- 
a  Rev.     Stat.,  part  1.    chap,    xviii.      tion    or  company    formed    for     the 

titles,  §4  purpose    of   issuing    notes  or   other 

4  Laws  of  18S2.  chap.  409,  §  299.  evidences  of   debt   to   be   loaned  or 

5  Id.  §  301.  put  in  circulation  as  money. 

6  Id.  §  300.     Sections  297  and  298  '  77  N.  Y.  64. 
provide  penalties  for  any  person  un- 


THE   DUTIES   OF   OFFICERS   AND    DIRECTORS.  1 53 

First  Department,  that  plaintiff's  charter  did  not  confer  upon 
it  banking  powers,  or  authorize  it  to  discount  commercial 
paper,  and  this  being  prohibited  by  statute  to  an)-  corpora- 
tion not  expressly  incorporated  for  banking  purposes,  the 
notes  were  void,  and  the  answers  set  up  a  good  defence. 

While,  however,  the  security  itself  is  void,  and  furnishes 
no  ground  of  action,  yet  the  plaintiff  in  such  a  case  is  en- 
titled to  recover  the  money  received  by  the  defendant  upon 
such  void  security,  in  an  action  properly  brought  for  that 
purpose.1 

CERTAIN   TRANSFERS    PROHIBITED. 

Whenever  any  incorporated  company  shall  have  refused 
the  payment  of  any  of  its  notes,  or  other  evidences  of  debt, 
in  lawful  money  of  the  United  States,  it  shall  not  be  lawful 
for  such  company,  or  any  of  its  officers,  to  assign  or  transfer 
any  of  the  property  or  choses  in  action  of  such  company  to 
any  officer  or  stockholder  of  such  company  directly  or  indi- 
rectly for  the  payment  of  any  debt  ;  and  it  shall  not  be  law- 
ful to  make  any  transfer  or  assignment  in  contemplation  of 
the  insolvency  of  such  company  to  any  person  or  persons 
whatever  ;  and  every  such  transfer  and  assignment  to  such 
officer,  stockholder  or  other  person,  or  in  trust  for  them  or 
their  benefit,  shall  be  utterly  void.2 

This  statute  forbids  any  transfer  in  contemplation  of 
insolvency;  and  the  payment  of  a  debt  to  a  bona  fide  creditor 
under  such  circumstances  is  prohibited,  equally  with  a  gen- 
eral transfer  of  the  property,  or  an  assignment  in  trust  for 
creditors  ;3  and  the  same  is  true  of  a  confession  of  judgment, 
or  an  offer  to  allow  judgment  to  be  taken." 

But,  on  the  other  hand,  insolvency,  either  existing  or  un- 

1  Pratt    v.    Short,    79    N.    Y.    437;      1884,  chap.  434. 

Pratt  v.  Eaton,  id.  449.  3  Robinson  v.  Bank  of  Attica,  21  X. 

2  Rev.    Stat.,    part    I.  chap,    xviii.      Y.  406.       But   see  Varnttm   v.  Hart. 
th le   4,  ^   4.       This  section    was   re-      23  N'>rth  East.  Rep.  1S3. 

pealed   by  Laws   of   1882.  chap.  402,  4  Kingsley  v.  First  Natl,   Bank  of 

§  39,  but   was   restored   by    Laws   of      Bath,  31  Hun,  329. 


154  THE    LAW    OF   CORPORATIONS. 

avoidable,  and  known  at  the  time  to  the  officers  of  a  corpo- 
ration, is  not  of  itself  sufficient  to  bring  a  transfer  within  the 
prohibition  of  the  statute.  While  the  prohibition  applies  to 
existing  as  well  as  to  future  contemplated  insolvency,1  yet 
the  test  is  whether  the  act  itself  was,  as  a  matter  of  fact, 
done  in  contemplation  of  insolvency  ;  in  other  words,  upon 
what  was  passing  in  the  minds  of  the  officers  at  the  time  the 
transfer  was  made.  Actual  insolvency,  at  the  time  of  the 
transfer,  is  not  of  itself  conclusive  evidence  that  it  was  made 
in  Contemplation  of  such  insolvency  ;  and  unless  the  act  is 
done  on  account  of  such  existing  or  contemplated  insolvency, 
it  is  not  prohibited. 

Therefore  where  a  mortgage  was  made  in  pursuance  of  a 
prior  contract  by  which  the  company  was  bound,  and  under 
such  circumstances  that  it  could  not  have  a  choice,  the  con- 
dition of  insolvency  becomes  of  no  moment.2  And  where, 
in  the  usual  course  of  business,  a  bank  known  by  its  manag- 
ing officers  and  agents  to  be  insolvent,  but  continuing  busi- 
ness, pays  the  check  of  a  depositor  ignorant  of  its  financial 
condition,  such  a  payment  cannot  be  recovered  back  by  an 
assignee  of  the  bank.3 

It  seems  that  the  above  prohibitions  are  for  the  benefit 
of  creditors  and  not  of  stockholders,  and  that  such  transfers 
may  be  impeached  only  by  creditors  or  persons  representing 
creditors.4 

Transfers  by  Moneyed  Corporations. — Certain  corporations, 
denominated  "  moneyed  corporations,"  are  subject  to  many 
restrictions  not  imposed  upon  others  ;  among  these  are  sev- 
eral additional  prohibitions  in  regard  to  transfers  of  property. 
It  is  not  quite  certain  just  what  corporations  are  included 
among  "  moneyed  corporations."  The  statute  defines  them 
as  being  "  every  corporation  having  banking  powers,  or  hav- 

1  Robinsons. Bank  of  Attica  (supra).  ATatl.  Bank,  59  N.  Y.  5. 

2  Paulding  v.   The  Chrome  Steel  Co.,  A  Sheldon  Hat  Blocking  Co.  v.  Eicke- 
94  N.  Y.  334.  merer  Hat  Blocking  M.  Co.,  90  X.  Y. 

3  Dutcher  v.  Importers  and  Traders"  607. 


THE   DUTIES   OF   OFFICERS   AND   DIRECTORS. 


155 


ing  the  power  to  make  loans  upon  pledges  or  deposits,  or 
authorized  by  law  to  make  insurances."  '  This  language  is 
clear  and  intelligible,  and  broad  enough  to  include  banks 
within  its  provisions ;  but  whether  it  does  apply  to  any 
except  such  as  were  chartered  prior  to  the  Banking  Act  of 
1838  is  a  question  that  cannot  be  said  to  be  fully  settled." 

In  addition  to  the  above  provisions,  no  moneyed  corpo- 
ration is  permitted  to  make  any  conveyance,  assignment  or 


1  Laws  of  18S2,  chap.  409,  §  214. 

'■*  In  his  work  on  the  Banking  Laws 
of  the  State  of  New  York  (p.  219) 
Mr.  Willis  S.  Paine,  former  Superin- 
tendent of  Banking,  says  that  the 
provisions  probably  do  not  apply 
to  banks  organized  under  chapter 
409  of  Laws  of  1882;  and  such 
was  undoubtedly  the  construction 
that  the  courts  gave  to  the  pro- 
visions of  the  Revised  Statutes  re- 
lating to  moneyed  corporations  as 
applied  to  banks  organized  under  the 
general  banking  law  of  183S.  Leavitt 
v.  Blatchford,  17  N.  Y.  521;  Belden 
v.  Meeker,  47  id.  307;  McLean  v. 
Eastman,  11  Hun,  312.  But  in  1880 
the  legislature  passed  an  act  to  pro- 
vide for  the  compilation  and  revision 
of  the  laws  affecting  banks,  banking 
and  trust  companies,  under  which  a 
commission  was  appointed  and  all  of 
the  laws  relating  to  those  subjects 
were  compiled  and  revised,  and  such 
revision  became  a  law  July  1,  1S82 
(Laws  of  1882,  chap.  409),  as  "An 
Act  to  Revise  the  Statutes  of  this 
State  relating  to  Banks,  Banking  and 
Trust  Companies;"  and  on  the  same 
day  the  provisions  of  the  Revised 
Statutes  above  referred  to  regulating 
and  prohibiting  certain  transfers  by 
.moneyed  corporations  were  repealed 
(Laws  of  1S82,  chap.  402),  and  those 
regulations, with  others,  were  included 
in  sections  179  to  194,  inclusive,  of 


the  above  act.  In  view  of  the  fact 
that  these  sections  form  part  of  an 
act  expressly  devoted  to  a  revision  of 
the  banking  laws,  it  seems  hardly 
safe  to  assume,  in  the  absence  of  any 
decision  upon  this  subject  since  the 
passage  of  this  act,  that  they  would 
be  held  not  to  apply  to  banks  organ- 
ized under  it.  Some  force  is  lent  to 
the  argument  that  they  do  not  apply 
to  banks  from  the  fact  that  section 
57  specially  provides  that  certain 
sections  other  than  the  above  relat- 
ing to  elections,  transfer  books,  etc., 
shall  apply  to  banking  associations, 
thereby  perhaps  implying  an  intent 
on  the  part  of  the  legislature  to 
exclude  them  from  the  provisions  of 
the  above  sections. 

For  cases  holding  that  banks  or- 
ganized under  the  general  banking 
law  of  1838  were  subject  to  these 
provisions,  but  which  were  overruled 
by  Leavitt  v.  Blatchford  {supra),  see 
Warner  v.  Beers,  23  Wend.  103; 
Supervisors  of  Xiagara  v.  T/ie  People, 
7  Hill,  504;  Gillet  v.  Moody,  3  N.  Y. 
487;  Talmage  v.  Pell,  7  N.  Y.  32S; 
Gillet  v.  Phillips,  13  N.  Y.  114. 

The  case  of  Curtis  v.  Leavitt,  15 
N.  Y.  9,  contains  an  elaborate  and 
exhaustive  statement  of  the  purposes 
of  the  general  banking  law,  and  of 
the  powers  and  duties  of  banks  or- 
ganized under  it. 


156  THE   LAW    OF   CORPORATIONS. 

transfer  of  any  of  its  real  estate,  unless  authorized  by  a  pre- 
vious resolution  of  its  board  of  directors,  nor  of  any  of  its 
effects  exceeding  the  value  of  one  thousand  dollars  without 
like  authorization  ;  but  this  does  not  apply  to  the  issuing  of 
promissory  notes,  or  other  evidences  of  debt,  by  the  officers 
of  the  company  in  the  transaction  of  its  ordinary  business, 
nor  to  the  payments  in  specie,  or  other  current  money,  or  in 
bank  bills  made  by  such  officers  ;  nor  will  a  transfer  to  a 
purchaser  for  a  valuable  consideration  and  without  notice  be 
affected.1 

No  such  conveyance,  assignment  or  transfer,  nor  any 
payment  made,  judgment  suffered,  lien  created  or  security 
given  by  any  such  corporation  when  insolvent,  or  in  contem- 
plation of  insolvency,  with  the  intent  of  giving  a  preference 
to  any  particular  creditor  over  other  creditors  of  the  com- 
pany, will  be  valid  in  law ;  and  every  person  receiving  by 
means  of  any  such  conveyance,  assignment,  transfer,  lien, 
security  or  payment,  any  of  the  effects  of  the  corporation  is 
bound  to  account  therefor  to  its  creditors  or  stockholders  or 
their  trustees,  as  the  case  shall  require.2 

The  transferee  of  a  note  for  more  than  one  thousand 
dollars  which  was  on  its  face  payable  to  such  corporation, 
and  was  transferred  without  the  authority  of  the  board  of 
directors,  cannot  recover  on  it  against  the  makers  unless  he 
can  prove  that  he  took  it  in  good  faith  and  for  value.3  But 
if  the  note  were  for  less  than  one  thousand  dollars,  although 
transferred  as  a  part  of  securities  making,  together,  more 
than  that  sum,  it  seems  the  prohibition  would  not  apply.4 

Special  provisions  in  a  charter  granted  subsequent  to  a 
general  law  will  govern  the  mode  of  transfer.6 

1  Laws  of  1S82,  chap.  409,  £  186.  to    the    Revised    Statutes    provided 

2  Id.  §  187.  that   notes   might    be  transferred  in 

3  Houghton  v.    McAuliff,    2    Abb.      a   manner    different    from   that  pre- 
App.  Dec.  409.  scribed  by  the  Revised  Statutes,  the 

4  Ogdt-n  v.  Raymond,  3  Abb.   App.      rule  prescribed  by  the  charter  would 
Dec.  396.  govern  transfers.      Wood  v.  Welling- 

5  Where   the   charter  of  an  insur-      ton,  30  N.  Y.  21S  ;  Brookman  v.  Met- 
ance    company    granted    subsequent      calf,  32  id.  591. 


THE    DUTIES    OF    OFFICERS    AND    DIRECTORS. 


157 


While  the  statute  has  no  application  in  the  case  of  a  trans- 
fer to  a  bona  fide  holder  for  value,  or  in  the  usual  and  cus- 
tomary course  of  business,'  yet,  as  the  object  of  the  statute 
is  to  secure  an  equal  distribution  of  the  effects  of  the  com- 
pany in  case  of  insolvency,  a  payment  made  by  such  a  cor- 
poration when  actually  insolvent,  or  in  contemplation  of 
insolvency,  and  with  the  intent  of  giving  a  preference  to 
creditors,  is  void,  and  may  be  recovered  back  by  a  receiver 
of  the  company,  even  though  the  creditor  had  no  knowledge 
of  the  condition  of  the  company  at  the  time  of  such  pay- 
ment.2 

For  such  a  payment,  however,  to  be  prohibited,  not  only 
must  insolvency  actually  be  contemplated  by  the  officers, 
but  the  transfer  must  be  made  with  the  intent  of  giving  a 
particular  creditor  a  preference  over  other  creditors.3 


1  Ogden  v.  Raymond  {supra)  ;  Rob- 
inson v.  Bank  of  Attica,  21  N.  Y. 
406  ;  Houghton  v.  McAuliff  {supra)  ; 
Dutcher  v.  Importers  &*  Traders'  Nat. 
Bank,  59  N.  Y.  5  ;  Marine  Bank  v. 


Clements,  31  N.  Y.  33. 

2  Brouwer  v.  Harbeck,  9  N.  Y.  589. 

:;  Marine  Bank  v.  Clements,  31    N. 
Y.  33  ;  Curtis  v.  Leavitt,  15  N.  Y.  9. 


I58  THE    LAW    OF   CORPORATIONS. 


CHAPTER  V. 
THE    LIABILITIES  OF  OFFICERS  AND   DIRECTORS. 

The  names  directors  and  trustees  are  used  interchange- 
ably in  the  statutes  of  this  state  to  denote  those  persons  who 
have  the  control  and  management  of  the  affairs  of  a  corpo- 
ration. Such  persons  occupy  a  position  of  trust,  not  only 
towards  the  stockholders  of  the  corporation,  but  also  towards 
its  creditors.1 

As  is  said  by  Finch,  J.,  in  Duncomb  v.  The  New  York, 
Honsatonic  &  Northern  Railroad  Co.  {supra),  "  Whether  a 
director  of  a  corporation  is  to  be  galled  a  trustee  or  not  in  a 
strict  sense,  there  can  be  no  doubt  that  his  character  is  fidu- 
ciary, being  entrusted  by  others  with  powers  which  are  to  be 
exercised  for  the  common  and  general  interests  of  the  cor- 
poration and  not  for  his  own  private  interests,  and  he  falls 
therefore  within  the  doctrine  by  which  equity  requires  that 
confidence  shall  not  be  abused  by  the  party  in  whom  it  is 
reposed,  and  which  it  enforces  by  imposing  a  disability, 
either  partial  or  complete,  upon  the  party  entrusted  to  deal 
on  his  own  behalf  in  respect  to  any  matter  involving  such 
confidence." 

The  statutes  recognize  this  fiduciary  position  of  officers 
and  directors  by  imposing  upon  them  certain  liabilities  and 
penalties  for  the  neglect  or  failure  to  perform  the  duties  de- 
volving upon  their  office,  or  for  performing  such  duties 
negligently  or  fraudulently. 

Liability  for  Withdrawing  Capital,  etc. — The  Revised  Statutes 
provide  a  that  it  shall  not  be  lawful  for  the  directors  or  man- 

1  Hoyle  v.  Plattsburgh  &  Montreal  Co.,  84  id.  igo. 

R.  R.  Co.,  54  N.  Y.  314;   Barnes  v.  2  Revised   Statutes,   part    I.   chap. 

£ro7i>n.  So  id.  517  ;  Duncomb  v.  New  xviii.  title  4,  §  2. 
York,  Housatonic  &  Northern  K.  R. 


THE   LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     1 59 

agers  of  any  incorporated  company  in  tin's  state  "  to  make 
dividends  excepting  from  the  surplus  profits  arising  from  the 
business  of  such  corporation;  and  it  shall  not  be  lawful  for 
the  directors  of  any  such  company  to  divide,  withdraw,  or 
in  any  way  pay  to  the  stockholders,  or  any  of  them,  any 
part  of  the  capital  stock  of  such  company,  or  to  reduce  the 
said  capital  stock,  without  the  consent  of  the  legislature  ; 
and  it  shall  not  be  lawful  for  the  directors  of  such  company 
to  discount  or  receive  any  note,  or  other  evidence  of  debt, 
in  payment  of  any  instalment  actually  called  in  and  required 
to  be  paid,  or  any  part  thereof,  due  or  to  become  due  on 
any  stock  in  the  said  company ;  nor  shall  it  be  lawful  for 
such  directors  to  receive  or  discount  any  note,  or  other  evi- 
dence of  debt,  with  the  intent  of  enabling  any  stockholder 
in  such  company  to  withdraw  any  part  of  the  money  paid  in 
by  him  on  his  stock.1 

"  In  case  of  any  violation  of  the  provisions  of  this  section, 
the  directors  under  whose  administration  the  same  may  have 
happened,  except  those  who  may  have  caused  their  dissent 
therefrom  to  be  entered  at  large  on  the  minutes  of  the  said 
directors  at  the  time,  or  were  not  present  when  the  same 
did  happen,  shall,  in  their  individual  and  private  capacities, 
jointly  and  severally  be  liable  to  the  said  corporation,  and 
to  the  creditors  thereof  in  the  event  of  its  dissolution,  to  the 
full  amount  of  the  capital  stock  of  the  said  company  so 
divided,  withdrawn,  paid  out  or  reduced,  and  to  the  full 
amount  of  the  notes  or  other  evidences  of  debt  so  taken  or 

1  The  above  provisions  are  made  of  shares  of  its  own  stock  ;  or  to  re- 
specially  applicable  to  moneyed  cor-  ceive  any  such  shares  in  payment  or 
porations  (Laws  of  18S2,  chap.  409,  satisfaction  of  a  debt  due  to  such  cor- 
§  179)  ;  and  by  the  Penal  Code  it  is  poration  ;  or  to  receive  in  exchange 
made  a  misdemeanor  for  a  director  for  the  shares,  notes,  bonds  or  other 
to  concur  in  any  vote  by  which  it  is  evidences  of  debt  of  such  corpora- 
intended  to  do  any  of  the  above  acts;  tion,  shares  of  the  capital  stock,  or 
or  by  which  it  is  intended  to  apply  notes,  bonds  or  other  evidences  of 
any  portion  of  the  funds  of  such  cor-  debt  issued  by  any  other  stock  cor- 
poration except  surplus  profits  di-  poration.  Penal  Code,  §  594. 
rectly  or  indirectly  to  the  purchase 


l6o  THE   LAW   OF   CORPORATIONS. 

discounted  in  payment  of  any  stock,  and  to  the  full  amount 
of  any  notes  or  evidences  of  debt  so  discounted  with  the 
intent  aforesaid,  with  legal  interest  on  the  said  respective 
sums,  from  the  time  such  liability  accrued  ;  and  no  statute 
of  limitations  shall  be  a  bar  to  any  suit  at  law  or  in  equity 
against  such  directors  for  any  sums  for  which  they  are  made 
liable  by  this  section  :  provided,  that  this  section  shall  not 
be  construed  to  prevent  a  division  and  distribution  of  the 
capital  stock  of  such  company  which  shall  remain  after  the 
payment  of  all  its  debts,  upon  the  dissolution  of  such  com- 
pany or  the  expiration  of  its  charter." 

The  Same  of  Moneyed  Corporations. — In  addition  to  the  above 
prohibitions,  the  directors  of  moneyed  corporations  are  for- 
bidden to  make  any  loans  or  discounts  if  the  corporation 
have  banking  powers  by  which  the  whole  amount  of  the 
loans  and  discounts  of  the  company  shall  be  made  to  exceed 
three  times  its  capital  stock  then  paid  in  and  actually  pos- 
sessed ;  or  to  make  any  loans  or  discounts  to  the  directors 
of  such  corporation,  or  upon  paper  upon  which  such  direc- 
tors, or  any  of  them,  shall  be  responsible  to  an  amount  ex- 
ceeding in  the  aggregate  one-third  of  the  capital  stock  of 
such  corporation  actually  paid  in  and  possessed  ;  but  no 
securities  taken  for  any  such  loans  or  discounts  shall  be  in- 
valid.1 

In  the  calculation  of  profits  of  moneyed  corporations 
previous  to  a  dividend,  debts  or  interest  accrued  and  unpaid 
may  not  be  included  ; 2  and  all  interest  on  debts  due  and  un- 
paid, and  all  losses,  must  be  deducted  from  the  actual  prof- 
its ; 3  and  if  the  losses  sustained  exceed  the  undivided  prof- 
its, they  must  be  charged  as  a  reduction  of  the  capital  stock, 
and  no  dividend  may  thereafter  be  made  on  the  shares  of 
such  stock  until  such  deficit  is  made  good  ;4  and  if  in  conse- 
quence of  such  reduction  the  whole  amount  of  the  loans  and 

1  Laws  of  1882,  chap.  409,  §  179.  2  Laws  of  1882,  chap.  409,  §  180. 

And  concurrence  in  such  a  vote  is  a  3  Id.  §  181. 

misdemeanor.     Penal  Code,  §  595.  4  Id.  §  182. 


THE    LIABILITIES   OF   OFFICERS   AND    DIRECTORS.     l6l 

discounts  made  by  any  corporation  having  banking  powers 
shall  exceed  three  times  the  amount  to  which  its  capital  is 
or  ought  to  be  reduced,  enough  of  such  loans  must  be 
called  in  without  delay  to  reduce  the  whole  amount  within 
the  prescribed  limit.1 

If  any  share  of  its  own  capital  stock  shall  be  hypothe- 
cated or  pledged  to  any  moneyed  corporation,  and  the  debt 
is  not  paid  when  due,  such  shares  must  be  sold  within  sixty 
days  thereafter ;  and  if  not  so  sold,  and  the  debt  remains 
unsatisfied,  they  must  be  charged  at  the  amount  actually 
paid  thereon,  as  a  reduction  of  the  capital  stock  of  the  com- 
pany, and  no  dividend  may  be  made  until  such  deficit  is 
made  good.3 

This  section  does  not  make  it  the  absolute  duty  of  the 
directors  to  sell  the  stock  in  such  a  case,  but  the  making  a 
dividend  is  precluded  until  the  deficit  is  made  good.3 

Any  director  violating  any  of  the  above  provisions  is  lia- 
ble, personally,  to  the  creditors  or  stockholders,  respectively, 
for  any  loss  they  may  sustain.4 

The  Same. — Manufacturing  Corporations. — If  the  trustees 
of  any  company  organized  under  the  Manufacturing  Act  de- 
clare and  pay  any  dividend  when  the  company  is  insolvent, 
or  one  the  payment  of  which  would  render  it  insolvent,  or 
which  would  diminish  the  amount  of  its  capital  stock,  they 
will  be  jointly  and  severally  liable  for  all  the  debts  of  the 
company  then  existing,  and  for  all  that  shall  thereafter  be 
contracted  while  they  continue  in  office.  If,  however,  any 
of  the  directors  object  to  the  declaring  of  such  dividends,  or 
to  the  payment  of  the  same,  and  before  the  time  fixed  for 
such  payment  shall  file  a  certificate  of  their  objection  in 
writing  with  the  clerk  of  the  company  and  with  the  clerk 
of  the  county,  they  shall  be  exempt  from  such  liability.6 

The  Same. — Miscellaneous  Corporations. — Those   directors 

1  Laws  of  1882,  chap.  409,  §  183.  143. 

2  Id.  §  184.  4Laws  of  18S2.  chap.  409,  §  188. 

3  Butterworth  v.  Kennedy,  5  Bosw.  5  Laws  of  1S4S,  chap.  40,  §  13. 


l62  THE    LAW   OF   CORPORATIONS. 

of  business  corporations  who  vote  for  such  dividends  are  lia- 
ble as  in  the  case  of  manufacturing  corporations.' 

The  directors  of  gas-light  companies  are  so  liable,  pro- 
vided that  if  a  certificate  of  objection  be  filed  within  thirty 
days  after  such  payment,  they  shall  be  exempt.2 

The  directors  of  guano  companies  3  and  inland  naviga- 
tion companies 4  are  liable  in  this  respect  in  the  same  man- 
ner as  the  directors  of  manufacturing  corporations,  except 
that  in  the  case  of  inland  navigation  companies,  to  free 
them  from  such  liability,  a  certificate  of  the  claims  and  de- 
mands in  favor  of  and  against  such  companies  must  first  be 
made  by  a  majority  of  the  trustees,  and  verified  by  the 
president  and  secretary,  and  filed  in  the  same  manner  as  the 
original  certificate  ;  and  no  dividend  may  be  paid  unless  the 
net  value  of  the  property,  claims  and  demands  of  such  com- 
pany, as  shown  in  such  certificate,  is  as  much  as  the  capital 
stock.5 

Construction  of  the  Above  Statutes. — The  object  of  the  prohi- 
bitions contained  in  such  statutes  as  the  above  is  to  pre- 
vent the  dissipation  of  the  fund  designed  for  the  security  of 
creditors  and  all  who  have  occasion  to  deal  with  such  cor- 
porations ;  and  courts  will  look  at  the  substance  of  the  act 
rather  than  to  the  mere  form  for  a  test  of  the  liability.  There- 
fore any  act  on  the  part  of  the  directors  which  has  the  effect 
of  dividing  the  assets  of  a  company  among  the  stockholders, 
and  thus  impairing  the  fund  available  for  creditors,  makes 
the  directors  liable  under  the  statute.6  But  such  prohibi- 
tions are  for  the  benefit  of  the  creditors  and  not  of  the 
stockholders,  and  therefore  a  receiver  of  a  corporation  can- 
not recover  from  the  directors  dividends  so  declared  for  the 
benefit  of  the  stockholders.7 

1  Laws  of  1875,  chap.  611,  §  19.  6  Gillet  v.    Moody,    3   N.   Y.    479'. 

2  Laws  of  1848,  chap.  37,  §  13.  Rorke  v.  Thomas,  56  id.  559. 

3  Laws  of  1857,  chap.  546,  §  13.  1  Butterworth  v.  O'Brien,  39  Barb. 

4  Laws  of  1854,  chap.  232,  §  14.  192. 
"Id.  §13. 


THE    LIABILITIES   OF   OFFICERS   AND    DIRECTORS.     163 

Where  a  remedy  against  the  directors  of  a  corporation 
for  the  impairment  of  the  capital  is  given  by  a  general  act, 
and  a  subsequent  act  for  the  incorporation  of  companies  for 
certain  specific  purposes  contains  a  provision  relating  to 
the  same  matter  and  establishing  a  different  penalty,  the 
directors  of  such  corporations  can  be  held  liable  only  under 
the  act  under  which  the  corporation  was  organized.  Ac- 
cordingly it  was  held  that  the  trustees  of  a  corporation 
organized  under  the  Manufacturing  Act1  were  not  liable 
under  the  Revised  Statutes  for  declaring  and  paying  a 
dividend  which  diminished  the  amount  of  the  capital  stock, 
but  that  the  liability  was  solely  under  section  13  of  the 
Manufacturing  Act,  which  imposed  a  different  penalty 
from  that  imposed  by  the  Revised  Statutes  and  prescribed 
different  modes  of  escaping  from  the  results  of  the  same 
act.2 

Loans  to  Stockholders  Prohibited. — The  provisions  in  re- 
spect to  loans  by  moneyed  corporations  to  their  directors 
have  been  considered  above.3 

In  certain  corporations  all  loans  to  stockholders  are  pro- 
hibited, and  the  officers  who  make  such  loans,  or  who  assent 
thereto,  become  jointly  and  severally  liable,  to  the  extent  of 
such  loans  and  interest,  for  all  the  debts  of  the  company 
contracted  before  the  repayment  of  the  sums  so  loaned. 
The  following  corporations  are  subject  to  the  same  pro- 
vision: corporations  organized  under  the  Manufacturing 
Act;4  corporations  organized  under  the  Business  Act;" 
building  companies  organized  under  chapter  117  of  the 
Laws  of  1 85 3." 

The  liability  under  this  statute  is  not  to  the  company  nor 
to  the  general  creditors  of  the   company,  but  only  to  those 


1  Laws  of  1848,  chap.  40.  «  Laws  of  1S4S.  chap.  40,  £  14. 

2  Excelsior  Petroleum  Co.  v.  Lacey,  B  Laws  of  1S75,  chap.  611,  §20. 
63  N.  Y.  422.  6  Laws  of  1853,  chap.  117.  §  14. 

3  Ante,   p.  160. 


164  THE   LAW   OF   CORPORATIONS. 

who  were  creditors  prior  to  the  repayment  of  the  loan  ;  and 
it  seems,  therefore,  that  the  receiver  of  a  corporation  cannot 
maintain  an  action  against  a  director  for  having  partici- 
pated in  making  such  a  loan.1  And  in  any  event  there 
must  have  been  an  actual  loan  of  money,  in  such  a  form  as 
to  create  an  indebtedness  and  liability  for  repayment  on 
the  part  of  the  stockholder  in  order  to  sustain  the  action.  It 
was  accordingly  held  in  the  case  last  cited,  where  stock  had 
been  voted  to  a  stockholder  in  payment  for  patents,  and 
subsequently  a  portion  of  the  stock  was  retained  and  a 
money  payment  made  instead,  the  stock  to  be  delivered  to 
him  whenever  he  should  repay  the  money,  that  this  consti- 
tuted, at  most,  an  option  or  privilege  to  take  the  stock  upon 
the  repayment  of  the  money,  but  that  it  was  in  no  sense  a 
loan  and  created  no  obligation  to  pay  the  money  on  his 
part,  and  directors  assenting  thereto  were  not  liable.4 

Where  a  loan  is  in  fact  made,  the  directors  assenting 
thereto  are  not  freed  from  liability  by  informing  the  other 
officers  and  stockholders  of  the  loan.3 

Liability  for  Failure  to  make  Annual  Report. The  Manufac- 
turing Act  provides  that  if  any  company  organized  under 
the  act  shall  fail  to  file  and  publish  its  annual  report  as  re- 
quired by  the  act,4  all  of  the  trustees  of  the  company  shall 
be  jointly  and  severally  liable  for  all  of  the  debts  of  the 
company  then  existing,  and  for  all  that  shall  be  contracted 
before  such  report  shall  be  made ;  but  whenever  under  this 
section  a  judgment  shall  be  recovered  against  a  trustee 
severally,  all  the  trustees  of  the  company  shall  contribute  a 
ratable  share  of  the  amount  paid  by  such  trustee  on  such 
judgment,  and  such  trustee  shall  have  a  right  of  action 
against  his  co-trustees,  jointly  or  severally,  to  recover 
from  them  their  proportion  of  the  amount  so  paid  on  such 
judgment.6 

1  Billings  v.  Trask,  30  Hun,  314.  4  Ante,  p.  130. 

2  Id.  5  Laws  of  1848,  chap.  40,  §  12,  as 

3  Clark  v.  Acosta,  9  Bosw.  15S.  ,  amended  by  Laws  of  1875,  chap.  510. 


THE    LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     165 

This  provision  is  contained  literally  or  substantially  in 
the  acts  for  the  incorporation  of  the  following  companies: 
business  corporations  ;'  building  companies  ;2  and  gas-light 
companies.3 

Construction  of  the  Statute.  — We  have  seen  in  the  preced- 
ing chapter  what  constitutes  a  sufficient  report  under  the 
above  section,  and  the  necessary  acts  to  be  done  in  regard  to 
filing  and  publishing  the  same;  and  if  a  report  is  made  which 
conforms  with  these  requirements  no  liability  exists.4 

The  liabilities  imposed  by  this  section  are  wholly  created 
and  regulated  by  the  special  provisions  of  the  act.6  If  the 
act  is  in  form  complied  with,  no  liability  attaches  under  this 
section,  even  though  there  might  be  a  liability  under  some 
other  section  of  the  act.6 

Therefore  in  an  action  under  this  section  for  failure  to 
file  a  report  it  was  held  that  trustees  were  not  liable  for  fil- 
ing a  false  report,  as  the  penalties  imposed  in  that  case  are 
different,  and  the  liabilities  are  incurred  by  different  per- 
sons ;7  but  in  so  far  as  they  are  against  the  same  persons, 
the  two  causes  of  action  may  probably  be  joined.8 

1  Laws   of    1S75,  chap.  611,  §  iS,  294;    Butler   v.    Smalley,  17  J.  &  S. 

as  amended  by  Laws  of  1SS4,  chap.  492,  reversed  on  other  grounds,  101 

20S.  N.  Y.    71.      In    Bonn  ell    v.    Griswold 

3  Laws  of  1853,  chap.  117,  §  12.  the  question  arose  on  a  demurrer, 
This  act  does  not  contain  the  last  but  not  being  necessary  to  the  de- 
clause  providing  for  a  contribution  cision  of  the  case  the  court  suggests 
among  the  trustees;  and  without  the  question  without  deciding  it.  In 
such  provision  no  contribution  can  Butler  v.  Smalley  the  General  Term 
be  compelled.  Andrews  v.  Murray,  of  the  Superior  Court  held  that  the 
33  Barb.  354.  two  causes  of  action  might  be  joined ; 

3  Laws  of  184S,  chap.  37,  §  12.  No  but  there  being  no  finding  of  a  fraud- 
provision  for  contribution;  see  pre-  ulent  intent  in  the  case,  the  claim  for 
ceding  note.  liability  for  filing  a  false  report  was 

4  See  pp.  130-135  and  notes.  not  urged  on  the  appeal  to  the  Court 
6  Blake  v.  Griswold,  104  N.  Y.  613.  of  Appeals  and  the  question  is  not 
6  Bonnell  v.  Griswold,  80  N.  Y.  128;       passed  upon,  although  the  court    re- 

Whitney  Arms  Co.  v.  Barlow,  6S  id.  fers  to  the  abandonment  of  that  por- 
34.  tion  of  the   case  without    intimating 

1  Bonnell  v.  Griswold,  So  N.  Y.  that  the  two  causes  of  action  could 
128.  not  be  joined. 

8  Bonnell  v.    Griswold,    68   N.  Y. 


1 66 


THE   LAW   OF   CORPORATIONS. 


It  is  not  necessary  that  all  the  liabilities  be  enforced  by 
one  action.  There  may  be  as  many  different  actions  against 
the  trustees  as  would  lie  against  the  corporation  ;  and  the 
actions  may  be  brought  against  one,  some  or  all  of  the 
trustees,  and  be  prosecuted  at  the  same  time.1  Nor  is  it 
necessary  that  an  action  be  first  brought  against  the  cor- 
poration.2 

The  foundation  of  the  action  is  a  debt  existing  at  the 
time  of  the  failure  to  file  the  report.  And  the  penalty  is  im- 
posed upon  all  who  were  trustees  at  the  time  of  the  default 
for  the  debts  then  existing,3  or  for  such  debts  as  may  be 


1  Roach  v.  Duck-worth,  95  N.  Y.  391. 

2  Esmond  v.  Bullard,  16  Hun,  65; 
Miller  v.  White,  50  N.Y.  137;  Rorke 
v.   Thomas,  56  id.  559, 

3  Garrison  v.  Howe,  17  N.  Y.  45S; 
Boughton  v.  Otis,  21  id.  261;  Jones  v. 
Barlow,  62  id.  202;  Bruce  v.  Piatt, 
So  id.  379. 

As  to  whether  a  judgment  against 
a  corporation  is  in  any  case  an  "  ex- 
isting debt"  within  the  terms  of  the 
statute  is  a  question  of  some  per- 
plexity. It  seems  to  be  pretty  well 
settled  that  such  a  judgment  is  not 
even  prima  facie  evidence  of  such  a 
debt  as  against  a  trustee  who  was 
not  a  party  to  the  action.  Miller 
v.  White,  50  N.  Y.  137;  McMakonv. 
Macy,  51  id.  155;  Rorke  v.  Thomas, 
56  id.  559;  Whitney  Arms  Co.  v.  Bar- 
low,  63  id.  62. 

In  Miller  v.  White  an  action  was 
brought  against  the  defendants  as 
trustees  of  a  corporation  for  failure 
to  make  the  annual  report.  The 
complaint  set  forth  the  recovery  of  a 
judgment  against  the  company,  that 
the  execution  had  been  returned  un- 
satisfied, and  the  judgment  was  still 
unpaid  and  in  full  force.  Upon  the 
trial  a  motion  was  made  to  dismiss 
the  complaint  on  the  ground    that    it 


did  not  set  forth  any  original  cause 
of  action  against  the  company.  The 
motion  was  denied  and  exception 
taken.  The  judgment  roil  was 
offered  in  evidence,  and  the  court 
held  the  judgment  conclusive 
against  the  defendants  and  directed  a 
verdict  for  plaintiff.  No  evidence 
of  any  default  in  making  the  report 
subsequent  to  the  entry  of  the  judg- 
ment was  given,  though  subsequent 
defaults  were  alleged.  The  Court  of 
Appeals  in  reversing  the  judgment 
in  this  case  did  so  on  the  ground,  as 
stated  in  the  opinion,  that  "  the  prin- 
ciples of  law  are  better  sustained  by 
holding  this  judgment  not  evidence 
against  these  defendants;  that  they 
are  neither  parties  nor  privies  to  itr 
and  that  they  should  not  be  bound 
by  it ;  that  for  this  as  for  other  claims 
they  should  be  personally  served 
with  process,  and  given  an  oppor- 
tunity of  trying  the  question  of 
debt."  The  authorities  upon  this 
question  are  collated  in  the  opinion. 
In  Esmond  v.  Billiard,  16  Hun,  65, 
the  question  as  to  whether  a  judg- 
ment was  such  a  debt  was  discussed, 
and  it  was  held  that  a  judgment 
against  a  corporation  for  a  tort  was 
not  a  liability  for  which  the    trustees 


THE    LIABILITIES   OF   OFFICERS   AND    DIRECTORS.     167 

incurred  while  the  default  continues  ;  and  a  person  who  be- 
comes a  trustee  after  the  twenty  days  from  the  first  of 
January,  if  there  has  been  default  in  making  such  report,  is 
liable  for  all  debts  incurred  while   he   is    trustee   until   such 


could  be  held.  This  case  was 
affirmed  on  other  grounds,  sub  no- 
mine Losse  v.  Btillard,  79    N.  V.  404. 

In  Lewis  v.  Armstrong,  Supreme 
Court,  Special  Term,  1880,  8  Abb. 
N.  C.  385,  it  was  held,  on  a  demurrer 
to  the  complaint,  that  a  judgment 
against  the  corporation  on  a  contract 
was  an  existing  debt  within  the 
meaning  of  the  statute. 

In  Rorke  v.  Thomas,  56  N.  Y.  559, 
which  was  an  action  against  trustees 
for  paying  a  dividend  when  the  com- 
pany was  insolvent,  based  on  a 
judgment  against  the  corporation 
for  damages  for  breach  of  contract 
and  costs,  the  judgment  was  modi- 
fied by  striking  out  costs  and  in- 
terest on  the  judgment  against  the 
company  and.  as  modified,  affirmed, 
on  the  ground,  as  expressed  in  the 
opinion,  that  "the  costs  are  not 
within  the  terms  of  the  statute." 

In  Allen  v.  Clarke,  43  Hun,  377, 
it  was  held,  relying  upon  Miller  v. 
White,  that  a  judgment  for  costs 
against  a  plaintiff  corporation,  re- 
covered in  an  action  for  trespass 
commenced  by  it,  is  not  such  a  debt 
of  the  corporation  as  will  make  a 
trustee  liable  for  failure  to  make  a 
report.  This  case  was  reversed  in 
the  Court  of  Appeals  (10S  N.  Y. 
269);  Earl,  J.,  in  giving  the  opinion 
of  the  court,  saying: 

"The  sole  question  for  our  deter- 
mination is  whether  the  judgment 
for  costs  in  favor  of  [the  plaintiffs] 
in  an  action  brought  against  them 
by  the  company  for  a  tort  is  a  debt 
which  can  be  enforced  against  the 
defendant    as  a  trustee   of  the    com- 


pany, by  reason  of  its  failure  to 
make,  publish  and  file  the  report  re- 
quired by  section    12.    .    .   . 

"This  judgment  for  costs  was  in 
every  sense  a  debt  of  the  company 
which  it  was  under  precisely  the 
same  obligation  to  pay  as  any  other 
debt.  It  is  true  it  was  not  a  debt 
existing  antecedently  to  the  judg- 
ment, but  it  was  a  debt  created  by 
the  judgment  itself;  and  as  it  was 
a  debt  against  the  corporation  which 
it  was  bound  to  pay,  it  could  be  en- 
forced against  the  defendant. 

"  It  may  be  that  the  judgment  is 
not  collusive  as  against  the  defend- 
ant, and  it  is  undoubtedly  open  to 
him  to  show  that  the  recovery  was 
either  collusive  or  fraudulent.  But 
it  is  a  debt  created  by  the  judgment 
itself.  It  is  proved  by  the  produc- 
tion of  the  judgment,  and  that  is  at 
least  prima  facie  evidence  of  its  ex- 
istence. It  is  unlike  the  case  of 
Miller  v.  White,  where  the  judgment 
was  upon  a  debt  antecedently  ex- 
isting, in  which  case  it  was  held  that 
the  judgment  was  neither  conclusive 
nor  prima  facie  evidence  of  the  debt, 
and  that  it  was  the  duty  of  the  plain- 
tiff to  prove  and  establish  his  debt 
independently  of  the  judgment.  The 
reason  upon  which  that  decision  is 
based  can  have  no  application  to  a 
case  like  this,  where  there  was  no 
liability  on  the  part  of  the  company 
to  pay  the  costs  antecedently  to  or 
independently  of  the  judgment." 

The  distinction  in  these  cases, 
which  is  certainly  narrow,  is  that 
where  an  antecedent  debt  against 
the    corporation    exists,  a  judgment 


1 68 


THE   LAW    OF   CORPORATIONS. 


report   is   made.1     But  his  liability  is  limited  to  debts  con- 
tracted while  he  remains  a  trustee. 

Therefore  a  person  who  was  a  trustee  when  default  was 
made  is  not  liable  for  debts  contracted  after  he  ceased  to  be 
a  trustee,  although  the  default  continued.8  And  where  a 
trustee  resigned  after  the  debt  was  incurred  but  before  the 
time  for  making  the  report,  it  was  held  that  he  was  not 
liable  for  the  failure  to  make  such  a  report,  nor  was  it  nec- 
essary for  him  to  give  notice  of  his  resignation  to  any  one 
other  than  his  associates.3  But,  on  the  other  hand,  if  a  per- 
son participates  in  the  meetings  and  in  the  business  transac- 
tions of  the  company,  and  so  acts  generally  as  to  induce 
the  public  to  consider  him  an  officer  of  the  company,  he 
may,  as  a  de  facto  trustee,  become  liable  for  such  a  default, 
even  if  he  were  never  legally  elected  ;4  so  in  like  manner  a 
trustee  who  holds  over  without  election  and  continues  to 
act  as  such  trustee  is  liable  ;5  and  it  being  proved  or  admit- 
ted that  he  was  a  trustee  prior  and  subsequent  to  the  de- 


based on  such  a  debt  is  no  evidence 
against  the  trustees,  and  does  not 
constitute  a  debt  for  which  they  are 
liable  ;  but  if  there  be  no  antecedent 
debt,  one  may  be  created  by  a  judg- 
ment; but  whether  under  circum- 
stances essentially  different  from 
those  in  the  last  case,  where  the 
judgment  was  incurred  by  the  af- 
firmative act  of  the  corporation,  is 
doubtful. 

1  Chandler  v.  Hoag,  2  Hun,  613; 
aff'd.  63  N.  Y.  624. 

■  Shaler  &>  Hall  Quarry  Co.  v. 
Bliss,  27  N.  Y.  297. 

3  Bruce  v.  Piatt,  80  N.  Y.  379. 

But  a  mere  statement  made  by  a 
trustee  to  a  fellow-trustee,  that  he 
would  have  no  more  to  do  with  the 
company,  cannot  be  construed  as  a 
resignation.  The  intention  to  resign 
must  be  brought  home  to  the  corpor- 
ation.     Kindburg  v.  A/udgett,  Sup. 


Ct.,  Gen'l.  Term.,  24  Wk.  Dig.  229. 
And  declarations  by  a  director  to  the 
secretary  and  treasurer  of  a  company 
at  the  time  of  assigning  his  stock  to 
the  latter  individually  that  he  severed 
all  connections  with  the  company  and 
would  have  nothing  to  do  with  it,  but 
without  any  request  that  his  resigna- 
tion be  communicated  to  the  board  is 
not  sufficient;  and  evidence  that  such 
director,  after  assigning  his  stock, 
consented  to  take  back  a  new  certifi- 
cate of  the  requisite  number  of  shares 
to  entitle  him  to  continue  a  director, 
is  sufficient  to  justify  the  inference 
that  he  intended  to  remain  one. 
Chemical  Natl.  Bank  v.  Colwell. 
Common  Pleas,  Gen.  Term.,  9  N.Y. 
Supp.  285,  288. 

4  Easterly  v.  Barber,  65  N.  Y.  252. 

5  Craw  v.  Easterly,  54  N.  Y.  679; 
Deming  v.  Puleston,  55  id.  655;  Van 
Amburgh  v.  Baker,  81  id.  46. 


THE   LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     169 

fault,  it  will  be  presumed  that  he  continued  to  act  as  such.1 
But  where  his'term  of  office  had  expired  before  contracting 
the  debt  for  which  it  is  sought  to  make  him  liable,  it  is  nec- 
essary for  plaintiff  to  prove  that  he  held  over  and  continued 
to  act  as  trustee.  This  will  not  be  presumed,  and  any  cir- 
cumstances that  tend  to  show  that  he  was  not  in  fact  a 
trustee  at  the  time  of  the  default,  such  as  bankruptcy  and 
an  assignment  of  his  stock  to  an  assignee,  are  admissible 
to  show  that  he  was  not.2  Nor  is  it  sufficient  to  show  that 
a  person  is  a  stockholder  and  was  elected  a  trustee.  If 
there  were  no  acceptance  of  the  office  and  no  conduct  in- 
dicating an  intention  to  accept  it,  no  liability  attaches.3 

A  debt  imposed  upon  a  corporation  by  the  fraud  of  a 
creditor  or  his  agent  will  not  render  the  trustees  liable  under 
this  section  ; 4  nor  are  they  liable  where  bonds  issued  by  the 
corporation  were,  to  the  knowledge  of  the  plaintiff,  diverted 
from  the  purpose  for  which  they  were  intended;5  nor  where 
recovery  is  sought  for  the  tortious  act  of  the  corporation  ; ' 
nor  where  the  action  is  on  an  unliquidated  claim  for  damages; ' 
nor  where  the  obligation  to  pay  is  contingent ; 8  nor,  perhaps, 
where  an  action  has  previously  been  brought  against  the 
corporation  and  judgment  has  been  rendered  for  defendant.9 

Pleadings  and  Proofs. — The  plaintiff  in  these  actions  is  held 
to  a  strict  proof  of  all  the  facts  necessary  to  constitute  his 

1  Reed  v.  Keese,  60  N.  Y.  616.  that,    having     brought      an     action 

2  Phil,  df  Read.  Coal  and  Iron  Co.  against  the  corporation  and  it  having 
v.  Hotchkiss,  82  N.  Y.  471.  been  adjudged  that   the  corporation 

3  Cameron  v.  Seaman,  69  N.  Y.  was  not  indebted  to  plaintiff,  any 
396.  claim  that  plaintiff    might  have  had 

4  Adams  v.  Mills,  60  N.  Y.  533.  against  the  corporation  was  extin- 
B  Kirkland  v.  A'ille,  99  N.  Y.  390.  guished  by  such  judgment.  It  is 
6  Esmond  v.  Bullard,  16  Hun,  65.  difficult  to  reconcile  this  decision 
1  Victory    Webb    Co.  v.  Beecher,  26  with    the    cases    above  cited,  and  it 

Hun,  4S;  aff'd,  97  N.  Y.  651.  would  seem,  as   intimated  in   Kraft 

8  Whitney  Arms  Co.  v.  Barlow,  68  v.  Coykeudall,  34  Hun,  285,  that  the 
N.  Y.  34.  dissenting   opinion    of    Mr.    Justice 

9  Tyng  v.  Clark,  9  Hun,  269.  In  Daniels  in  this  case  is  more  in  con- 
this  case  the  court  held  the  proposi-  formity  with  the  law  as  now  settled, 
tion  as  above  stated  on  the  ground 


170  THE   LAW    OF   CORPORATIONS. 

cause  of  action.  It  must  be  alleged  in  the  complaint  that 
the  debt  was  existing  at  the  time  of  the  default  in  making 
the  report,  or  that  it  was  contracted  afterwards  and  before 
such  report  was  published.1  Every  fact  necessary  to  estab- 
lish the  liability  must  be  affirmatively  proved  by  the  plain- 
tiff, even  though  it  involve  proving  a  negative,  such  as  failure 
to  publish.2 

Where  a  defendant  attempts  to  rely  upon  a  default  made 
more  than  three  years  prior  to  the  commencement  of  an 
action,  and  in  his  answer  sets  up  an  affirmative  defence  which 
alleges  that  the  defendants,  three  in  number,  had  failed  to 
file  a  report  for  more  than  three  years,  and  that  more  than 
three  years  had  elapsed  since  any  penalty  or  claim  had  arisen 
against  them  as  trustees  in  plaintiff's  favor,  it  constitutes  no 
defence  in  law  ;  for,  as  the  Manufacturing  Act  provides  that 
corporations  organized  under  it  may  have  thirteen  trustees, 
it  will  not  be  assumed  that  three  constituted  a  majority  of 
the  board.3  If  the  prior  default  had  been  alleged  as  a  default 
by  the  corporation  instead  of  the  default  of  trustees  that 
might  constitute  less  than  a  majority  of  the  whole  number, 
it  would  be  a  good  defence,  as  when  a  trustee  has  once 
become  liable  for  a  particular  debt,  the  statute  of  limitations 
begins  to  run  in  his  favor  from  that  time  as  to  that  debt, 
notwithstanding  the  default  may  be  continued  during  suc- 
cessive years.4 

The  action  to  enforce  the  liability  of  a  trustee  under  this 
section  is  not  based  upon  the  theory  of  affording  compensa- 
tion to  the  injured  party  for  damages  sustained  by  the  de- 
fault complained  of,  but  is  highly  penal  in  its  nature,  and  the 
amount  of  the  debts  then  existing  is  the  measure  of  the 
penalty  imposed/ 

1  Chambers  v.  Lewis,  28  N.  Y.  454.        Vanderbilt,  98  N.  Y.  170;  Cornell  v. 

2  Whitney  Arms  Co.  v.  Barlow,  68       Roach,  101  N.  Y.  373. 

N,  Y.  34.  5  Merchants'    Bank    v.    Bliss,     35 

3  Cornell  v.  Roach,  101  N.  Y.  373-         N.  Y.  412;  Jones   v.  Barloiu,  62   id. 
*  Losee  v.    Bullard,  79   N.  Y.  404;       202;  Losee  v.   Ballard,    79    id.    404; 

The    Rector,    etc.,     of    Trin.    Ch.  v.        Bruce  v.  Piatt,  So  id.  379;  Bonnellv. 


THE    LIABILITIES    OF  OFFICERS   AND    DIRECTORS.     \Jl 

All  the  attributes  of  an  action  to  recover  a  penalty  follow 
it.  It  must  be  commenced  within  three  years  from  the  time 
the  cause  of  action  accrues;1  it  abates  upon  the  death  of 
either  party,  and  cannot  be  revived  by  or  against  their  per- 
sonal representatives;2  it  cannot  be  interposed  as  a  counter- 
claim in  an  action  ; 3  nor  can  the  cause  of  action  be  joined 
with  an  action  against  defendant  to  charge  him  with  a  liabil- 
ity as  a  stockholder  because  of  the  failure  of  the  corporation 
to  file  a  certificate  of  payment  of  capital  stock  ; 4  and  it  is  no 
defence  that  the  corporation  is  indebted  to  the  trustee.5 

A  trustee  sued  to  enforce  this  liability  is  entitled  to  have 
the  action  tried  in  the  county  where  the  cause  of  action 
arose,  irrespective  of  the  convenience  of  witnesses;'0  and  he 
may  serve  an  unverified  answer  to  a  verified  complaint.7 

All  of  the  trustees  being  equally  chargeable  with  the  duty 
of  making  a  report,  one  trustee,  being  a  creditor,  cannot  re- 
cover from  his  co-trustees  under  this  section,  nor  can  his  assign- 
ees nor  a  firm  with  which  he  is  connected.8  But  such  duty  not 
being  imposed  upon  the  stockholders,  a  stockholder  who  is 
a  creditor  may  enforce  the  remedy  as  well  as  an  outside 
creditor  ; 9  and  the  action  may  be  maintained  by  the  assignee 
of  a  creditor.10 

The  liability  of  the  trustee  is  coextensive  with  that  of 
the  corporation,  and  he  may  avail  himself  of   any  defence 

Griswold,     id.     12S  ;    Duckzvorth    v.  after  judgment  but  pending   appeal 

Roach,  Si  id.  49;    Veeder  v.  Baker,  83  to  the  Court  of  Appeals, the  represen- 

id.  156;  Pier  v.  George,    86  id.  613;  tatives  of  the  deceased  were  substi- 

Stokes  v.  Stickney,  96  id.  323;  Gadsen  tuted  in  his  place, 
v.  Woodward,  103  id.  242.  3  Clapp  v.   Wright,  11  Hun,  240. 

1  Merchants'  Bank  v.  Bliss,  35  N.  4  Wiles  v.  Suydam,  64  N.  Y.  173. 

Y.  412;  Losee  v.  Bullard,  79  id.  404;  5  Morey  v.  Ford.  32  Hun,  446. 

Duckworth    v.     Roach,     Si     id.     49;  6  Veeder  v.  Baker,  S3  N.  Y.  156. 

Rector,  etc.,  Trin.  Ch.  v.    Vanderbilt,  '  Gadsen  v.    Woodward,   103  N.  Y. 

98  id.  170.  242. 

a  Stokes  v.    Stickney,  96  N.  Y.  323;  8 Easterly  v.  Barber,  65  N.  Y.  252; 

Brackett   v.    Griswold,    103    id.   425,  Knox  v.  Baldwin,  So  id.  610. 
Boyle    v.    Thurber,     50     Hun,     259.  9  Sanborn  v .  I.efferts,  5S  X.  Y '.  179. 

In  the  case  of  Blake  v.  Griswold,  104  10  Bolen   v.  Crosby ',   49   N.  Y.   183; 

N.  Y.  613,  where  the  plaintiff   died  Pier  v.  George,  S6  id.  613. 


172  THE   LAW   OF   CORPORATIONS. 

which  would  be  a  valid  defence  to  an  action  brought  against 
the  corporation  ;  but  he  cannot  set  up  any  defence  which 
would  not  constitute  a  legal  or  equitable  defence  in  such  an 
action.1  In  such  an  action  the  declarations  of  the  president 
of  the  corporation  in  a  matter  affecting  its  business  and  in 
respect  to  which  he  was  acting  for  it  are  competent  evidence 
against  the  trustees  to  prove  the  indebtedness  of  the  com- 
pany.2 

The  strictness  with  which  this  section  is  construed  by  the 
courts  is  well  illustrated  in  the  case  of  Bonnell  v.  Griswold,3 
where  it  was  held  that,  under  the  Manufacturing  Act,  no 
penalty  attaches  for  failure  to  make  the  annual  report  if  all 
of  the  capital  stock  was  issued  for  property  purchased.  This 
on  the  ground  that  the  statute  empowering  such  corporations 
to  issue  stock  in  payment  for  property  was  an  independent 
act,4  not  amending  any  particular  section  of  the  Manufactur- 
ing Act,  and  that  the  penal  provisions  of  section  12  could 
not  be  extended  by  implication  so  as  to  cover  it.  This,  of 
course,  has  no  application  to  companies  which  are  authorized 
by  their  acts  of  incorporation  to  issue  stock  for  property. 

Liability    for   False   Reports   under   the   Manufacturing  Act If 

any  certificate  or  report  made,  or  public  notice  given,  by  the 
officers  of  any  such  company,  in  pursuance  of  the  provisions 
of  the  above  act,  is  false  in  any  material  representation,  all 
the  officers  who  have  signed  the  same,  knowing  it  to  be 
false,  are  jointly  and  severally  liable  for  all  the  debts  of  the 
company  contracted  while  they  are  stockholders  or  officers 
thereof.6 

The  cause  of  action  under  this  section,  like  that  for  fail- 
ing to  file  a  report,  is  highly  penal  in  its  nature  and  does  not 
affect  or  concern  any  property-right  or  interest,  and  is  not 


1  Jones  v.  Barlow,   62    N.  Y.  202;  4  Laws  of  1853,  chap.  333,  §  2. 
Whitney  Arms  Co.  v.  Barlow,  63  id.  5  Laws  of  1848,  chap.  40,  §  15.     It 
62;  Roach  v.  Duckworth,  95  id.  391.  is  also  made  a  misdemeanor  by  the 

2  Hoag  v.  Lamont,  60  N.  Y.  96.  Penal  Code,  §  603. 

3  80  N.  Y.  128. 


THE   LIABILITIES   OF   OFFICERS   AND    DIRECTORS.     173 

in  any  way  based  upon  the  theory  of  compensation  for 
injury  suffered.1  The  decisions  cited  under  the  former  sec- 
tion, so  far  as  relates  to  its  penal  character,  are  applicable 
to  this  and  will  not  be  repeated  here.2 

Those  trustees  only  who  sign  the  report  are  liable  under 
this  section,3  and  the  gist  of  the  action  is  the  fraudulent 
intent  of  the  officers  making  it.  As  is  said  by  Judge  Rapallo, 
in  giving  the  opinion  of  the  court  in  the  case  last  cited  : 
"  We  are  of  the  opinion  that  the  words  '  knowing  it  to  be 
false'  import  a  wilful  misrepresentation  with  actual  knowl- 
edge of  its  falsity,  and  not  merely  such  constructive  knowl- 
edge as  can  be  imputed  from  the  presumption  that  the 
officer  signing  the  report  knew  the  law  and  comprehended 
the  precise  import  of  the  language  used,  when  construed 
with  reference  to  statutory  provisions.  .  .  .  To  charge  the 
officer  with  the  severe  penalty  imposed  for  signing  a  false 
report,  knowing  it  to  be  false,  some  fact  or  circumstance 
must  be  shown  indicating  that  it  was  made  in  bad  faith, 
wilfully  or  for  some  fraudulent  purpose,  and  not  ignorantly 
or  inadvertently  ;  and  this  is  a  question  of  fact  which  must 
be  passed  upon  before  the  liability  can  be  adjudged."  4 

In  this  case  a  portion  of  the  capital  stock  was  issued  for 
property,  but  was  reported  as  "capital  paid  in;"  the  court, 
following  Bonncll  v.  Grisivold,b  held  that  this  implied  the 
payment  of  the  capital  in  cash,  and,  as  such,  contained  an 
untrue  representation  as  to  the  amount  of  capital  paid  in, 
and  that  this  representation  was  material ;  yet  as  there  was 
no  evidence  which  would  warrant  a  finding  of  bad  faith  or 
intention  to  deceive,  or  of  a  fraudulent  purpose,  and  it  ap- 
pearing, rather,  that  the  report  was  signed  heedlessly  and 
carelessly,  the  judgment  of  the  General  Term  affirming  a 
judgment  in  favor  of  plaintiff  was  reversed,  and  a  new  trial 
ordered. 

1  Stokes  v.  Stickney,  96  N.  Y.  323  ;  Pier  v.  Hanmore,  86  id.  95. 
Brackett  v.  Griswold,  103  id.  425.  4  Pier  v.  Hanmore,  86  N.  Y.  95. 

2  Ante,  p.  164  et  seq.  5  80  N.  Y.  128. 

3  Bonne//  v.  Griswold,  80  N.  Y.  128; 


174 


THE   LAW    OF   CORPORATIONS. 


The  case  of  Bonnell  v.  Griswold1  was  based  upon  a  similar 
state  of  facts,  and  it  was  held  that,  as  there  was  no  proof  of 
a  wilful  or  fraudulent  intent  on  the  part  of  the  trustees  sign- 
ing the  report,  they  were  not  liable  under  the  above  section. 
But  in  Blake  v.  Griswold,2  upon  the  same  pleadings  and  the 
same  state  of  facts,  but  where  the  finding  of  the  trial  court 
was  that  the  defendant  signed  the  report  in  bad  faith,  know- 
ing it  to  be  false,  it  was  held  that  the  facts  justified  such  a 
finding,  and  that  he  was  liable  to  a  creditor.  The  statement 
was :  "  That  the  capital  stock  of  said  company  is  two  mill, 
ions  of  dollars  ;  that  said  capital  stock  has  been  paid  up  in 
full." 

It  appeared  that  one  half  of  the  stock  had  been  issued  to 
another  company  for  property  worth  not  over  sixty  thousand 
dollars,  and  that  the  other  moiety  had  been  issued  to  one  of 
the  trustees,  without  consideration,  and  by  him  distributed 

affirming  a  judgment  of  the  Special 
Term  on  the  ground  that  the  report 
was  false  in  a  material  representa- 
tion, the  Court  of  Appeals  reversed 
the  judgments  and  granted  new  trials 
on  the  grounds  above  stated  (So. 
N.  Y.  122).  The  plaintiff,  Bonnell, 
having  died  pending  the  action,  an 
order  was  made  reviving  and  contin- 
uing the  action  in  the  name  of  the 
administrator,  and  judgment  again 
rendered  against  defendant  for  mak- 
ing a  false  report.  On  appeal  from 
the  judgment  and  order,  it  was  again 
reversed  on  the  ground  that  the  ac- 
tion abated  upon  the  death  of  the 
plaintiff  (Brackett  v.  Griswold,  103 
N.  Y.  425).  But  in  Blake  v.  Griswold 
on  the  last  appeal  (103  N.  Y.  429) 
the  judgment  was  affirmed  as  above 
stated  ;  and  on  a  motion  to  substi- 
tute the  administrator  of  the  plaintiff 
for  the  plaintiff  who  died  pending 
the  appeal,  the  motion  was  granted. 
104  N.Y.  613. 


1  89  N.  Y.  122. 

2  103  N.  Y.  429.  These  cases 
■were  heard  together  and  were  four 
times  before  the  Court  of  Appeals. 
The  actions  were  originally  brought 
against  the  trustees  of  a  corporation 
organized  under  the  Manufacturing 
Act  for  failure  to  file  a  report,  and 
for  filing  a  false  report.  Demurrers 
to  the  complaints  were  sustained,  on 
the  ground  that  the  two  causes  of 
action  did  not  affect  all  the  parties 
equally,  as  some  of  them  had  not 
signed  the  report  (68  N.  Y.  294).  The 
cases  again  coming  before  the  court 
(So  N.  Y.  128,  631),  on  appeal  by  de- 
fendants from  judgments  in  favor  of 
plaintiffs  for  failure  to  file  a  report, 
the  judgments  were  reversed  and 
new  trials  granted  on  the  ground 
that  the  section  imposing  a  liability 
for  failure  to  file  a  report  did  not  ap- 
ply where  stock  was  issued  for  prop- 
erty (see  ante,  p.  172).  On  the  third 
appeal  from  judgments  of  the  Gen- 
eral Term    of    the    Supreme    Court, 


THE   LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     175 

among  other  trustees  and  stockholders,  and  that  the  de- 
fendant, as  a  trustee,  signed  the  report,  knowing  these  facts 
to  be  true.1 

In  Arthur  v.  Griswold'1  (one  of  the  same  series  of  cases) 
the  cause  of  action  against  defendant  as  trustee  for  making  a 
false  report  was  joined  with  a  cause  of  action  for  obtaining 
money  by  false  and  fraudulent  representations  by  issuing  a 
false  prospectus.  One  of  the  defendants  had  not  signed  the 
annual  report,  and  the  court  charged  the  jury  that,  as  a 
matter  of  law,  plaintiff  was  entitled  to  a  verdict  against  those 
defendants  who  had  signed  the  report,3  and  if  they  found  that 
the  defendants  had  assented  to  the  making  and  circulation 
of  representations  known  by  them  to  be  false  and  fraudulent, 
then  they  should  find  a  verdict  against  all  the  defendants  ; 
but  if  they  found  no  fraud  on  the  part  of  the  defendants  in 
these  representations,  then  their  verdict  should  be  in  favor 
of  the  defendant  who  had  not  signed  the  report  and  against 
the  others.  The  jury  rendered  a  verdict  against  all.  Errors 
in  the  admission  of  evidence  regarding  the  false  representa- 
tions made  a  new  trial  necessary,  and  the  only  remaining 
question  was  whether  a  new  trial  should  be  granted  as  to 
all  or  only  as  to  the  one  who  had  not  signed  the  report. 
The  court  held  that  the  judgment  should  be  reversed,  and  a 
new  trial  granted  as  to  all  the  defendants.4 

The  history  of  the  different  appeals  in  the  above  cases 
shows  that  it  is  the  fraudulent  purpose  on  the  part  of  the 
trustees  signing  a  report  which  renders  them  liable.  Unin- 
tentional error  or  inadvertence  is  not  enough,  even  though 
there  be  a  false  material  representation.  The  fact  that  cer- 
tain liabilities  of  the  company  were  omitted  in  stating  the 

1  See  same  case  on  a  former  appeal,  under  the  circumstances  of  this  case. 
89  N.  Y.  122.  4  An  appeal  from  an  order  reviv- 
s  55  N.  Y.  400.  ing  this  action  against  the  represen- 
3  Under  the  later  decisions  in  Bon-  tatives  of  one  of  the  defendants  was 
nell  v.  Gristcold,  cited  above,  it  is  subsequently  dismissed  as  not  affect- 
not  probable  that  defendants  could  inga  substantial  right.  S.C.,6oN.Y. 
be  held  liable,  as    a   matter  of    law,  143. 


176  THE   LAW   OF   CORPORATIONS. 

indebtedness,  and  that  it  was  known  to  the  trustee  at  the 
time  the  report  was  made,  is  not  sufficient  to  render  him 
liable,  unless  there  be  a  fraudulent  intent  or  facts  showing 
actual  fraud.1 

The  cause  of  action  under  this  section  arises  in  the 
county  where  the  report  is  filed  ;  and  if  the  action  is  brought 
in  a  different  county,  defendants  are  entitled  to  have  it  re- 
moved. It  is  no  defence  to  a  motion  to  change  the  venue 
in  such  a  case  that  the  convenience  of  witnesses  or  the  ends 
of  "justice  would  be  promoted  by  retaining  the  place  of  trial 
in  the  county  in  which  the  action  was  originally  brought.2 
The  records  of  a  corporation  are  admissible  at  the  trial  to 
the  extent  of  showing  the  corporate  acts ; 3  but  whether  to 
the  extent  of  charging  a  defendant  in  an  action  of  this  na- 
ture with  knowledge  of  the  facts  recorded  is  doubtful. 

The  language  of  this  section  in  regard  to  the  liability  of 
officers  for  making  a  false  report  is  followed  in  the  acts 
for  the  incorporation  of  gas-light  companies4  and  guano 
companies,5  and  substantially  the  same  in  the  act  for  the 
incorporporation  of  ferry  companies,  except  that  in  the 
latter  act  it  refers  only  to  "  directors,"  and  the  liability  is 
limited  to  debts  contracted  while  they  are  directors.8 

Liability  under  the  Business  Act. — The  Business  Act  pro- 
vides that  if  any  certificate  or  report  made  or  public  notice 
given  by  the  officers  of  any  such  corporation  shall  be  false 
in  any  material  representation,  all  the  officers  who  shall 
have  signed  the  same  shall  be  jointly  and  severally  liable 
for  all  the  debts  of  the  corporation  contracted  while  they 
are  officers  thereof.7 

This  section  does  not,  as  does  the  corresponding  section 
of  the  Manufacturing  Act,  restrict  its  application  to  cases 
where  trustees  have  signed  a  report  with  a  knowledge  of  its 

1  Butler  v.  Smalley,  101  N.  Y.  71.  5  Laws  of  1857,  chap.  546,  §  15. 

2  Feeder  v.  Baker,  83  N.  Y.  156.  8  Laws  of  1853,  chap.  135,  §  17. 

3  Blake  v.  Griswold,  103  N,  Y.  429.  '  Laws  of  1875,  chap.  611,  §  21. 

4  Laws  of  iS4S,  chap.  37,  §  14. 


THE   LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     1/7 

falsity.  The  words  "  knowing  it  to  be  false"  are  omitted, 
and  thus  the  liability  would  be  incurred  if  any  report  was  as 
a  matter  of  fact  false  in  any  material  representation,  irre- 
spective of  the  fraudulent  intent  of  the  officers  signing  the 
same.1 

It  was  accordingly  held  in  Torbett  v.  Eaton  3  that  the 
fact  that  defendant  had  signed  a  false  report  in  good  faith, 
having  no  knowledge  or  information  that  it  was  in  any  re- 
spect untrue,  and  that  he  did  not  have  any  reason  to  believe 
it  to  be  untrue  in  any  respect,  and  that  he  exercised  proper 
care  and  diligence  before  he  signed  the  report  to  ascertain 
the  facts  set  forth  and  to  which  it  related,  constituted  no 
defence.  Judge  Daniels,  in  giving  the  opinion  of  the  court 
in  this  case,  says  that  the  omission  of  the  words  "  knowing 
it  to  be  false"  from  the  corresponding  section  of  the  Manu- 
facturing Act  must  be  presumed  to  have  been  intentional 
on  the  part  of  the  legislature,  and  it  follows  from  such  omis- 
sion that  the  design  was  to  render  the  officers  of  corpora- 
tions formed  under  this  act  liable  for  the  payment  of  its 
debts  when  a  report  proves  false  in  a  material  representa- 
tion, and  it  was  also  held  that  directors  were  officers  within 
the  meaning  of  the  statute. 

In  the  case  of  Huntington  v.  Attn//,3  recently  decided  in 
the  Court  of  Appeals,  it  was  held  that  knowledge  of  the  fal- 
sity of  a  report  signed  by  directors  was  not  necessary  in  or- 
der to  render  them  liable  under  the  provisions  of  this  act ; 
nor  would  the  jury  in  an  action  brought  against  directors  to 
charge  them  with  this  liability  be  required  to  give  the  de- 
fendants the  benefit  of  all  reasonable  doubts,  in  the  sense 
applicable  to  criminal  cases,  but  should  decide  by  a  fair  pre- 
ponderance of  evidence: 

In  Hatcli  v.  Attrz//,*  decided  at  the  same  time,  it  was 
held  that  a  report  of  commissioners  that  one-half  of  the 

1  Van  Ingen  v.   Whitman,  62  N.  Y.  3  23  North  East.  Rep.  544. 
513.  4  23  North  East.  Rep.  549. 

2  49  Hun,  209;  aff'd,  113  N.Y.  623. 


Ij2>  THE    LAW    OF   CORPORATIONS. 

capital  stock  had  been  subscribed  and  ten  per  cent,  thereon 
paid  in  in  cash,  which  report  was  false  in  fact,  was  compe- 
tent evidence  against  the  directors  in  such  an  action. 

The  language  of  the  Business  Act  is  followed  substan- 
tially in  the  acts  for  the  incorporation  of  building  compan- 
ies '  and  inland  navigation  companies,2  except  that  in  these 
acts  the  liability  is  extended  to  any  debts  contracted  while 
the  persons  signing  the  false  report  or  certificate  are  stock- 
holders or  officers  of  the  corporation. 

•  Liability  Independently  of  Statute. — Independently  of  any 
statutory  provisions,  a  director  of  a  corporation  who  know- 
ingly makes  or  publishes  false  reports  or  statements  whereby 
others  are  injured  is  liable  for  loss  occasioned  by  such  acts.* 
Liability  for  Debts  in  Excess  of  Capital. — If  the  total  amount 
of  the  debts  which  any  incorporated  company  shall  at  any  time 
owe,  whether  for  deposits  or  by  bond,  bill,  note  or  other 
contract,  over  and  above  the  actual  deposits  with  such  com- 
pany, shall  exceed  three  times  the  amount  of  the  capital 
stock  actually  paid  in,  the  directors  under  whose  adminis- 
tration the  same  may  have  happened,  except  those  who 
may  have  caused  their  dissent  therefrom  to  have  been 
entered  at  large  on  the  minutes  of  the  directors  at  the 
time,  and  except  the  directors  who  were  not  present  when 
the  same  happened,  are,  in  their  individual  and  private 
capacities,  jointly  and  severally  liable  for  such  excess  to 
the  corporation,  and  in  the  event  of  its  dissolution,  to  any 
of  its  creditors,  to  the  full  amount  of  such  excess,  with 
legal  interest  from  the  time  such  liability  accrued  ;  and 
no  statute  of  limitations  is  a  bar  to  any  suit  at  law  or  in 
equity  against  such  directors  for  any  sums  of  money  for 
which  they  are  thus  liable.4 

'.Laws  of  1853,  chap.  117,  §  15.  personally   therefor.     Hun  v.    Cary, 

5  Laws  of  1854,  chap.  232.  §  15.  82   N.    Y.   65;  Brinckerhoff  v.  Bost- 

3  Wakemanv.  Dalley,  51  N.Y.  27  ;  wick,  S3   id.  52.     But  not  so   if  they 

Morgan  v.  Skiddy,  62  N.  Y.  319.   And  acted  without  negligence.     Excelsior 

directors  losing  or  wasting  the  cor-  Petroleum  Co.  v.  Lacey,  63  id.  422. 

porate  funds  in  consequence  of  gross  4  Rev.    Stat.,   part   1.    chap,    xviii. 

negligence  on  their  part  are  liable  title  4,  §  3. 


THE   LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     I?Q 

The  acts  for  the  incorporation  of  certain  companies 
provide  that  if  the  indebtedness  of  any  such  company  shall 
at  any  time  exceed  the  amount  of  its  capital  stock,  the 
directors  or  trustees  of  such  company  assenting  thereto  are 
personally  and  individually  liable  for  such  excess  to  the 
creditors  of  such  company. 

The  acts  which  contain  this  provision  are  those  for  the 
incorporation  of  the  following  companies:  manufacturing 
companies;1  business  companies  f  building  companies;3  park 
associations.4 

The  liability  under  these  sections  is  not  penal  in  its 
nature,  but  contractual.5  When  the  debts  exceed  the 
amount  of  the  capital  in  the  four  classes  of  corporations  last 
named,  or  three  times  the  amount  of  the  capital  of  other 
corporations,  the  liability  of  the  trustee  begins.  He  be- 
comes a  surety  for  the  debts  of  the  corporation  for  such  ex- 
cess. His  liability,  however,  does  not  extend  to  any  partic- 
ular debt.  It  is  a  general  liability,  and  when  once  discharged 
does  not  revive.  Thus  it  is  a  good  defence  to  an  action  to 
enforce  this  liability  that  the  trustee  has  already  paid  the 
amount  of  the  excess,  or  that  he  is  a  creditor  of  the  corpo- 
ration to  that  extent.6  And  it  also  follows  from  its  contrac- 
tual nature  that  the  cause  of  action  survives,  and  the  action 
may  be  continued,  against  the  representatives  of  an  assent- 
ing trustee.7 

The  liability  is  joint,  not  several,  and  all  of  the  assenting 
trustees  must  be  joined  in  an  action  to  enforce  it.8  And  all 
creditors  must  be  made  parties  to  the  action   in   order  to 


1  Laws  of  1848,  chap.  40,  §  23.  Patterson  v.  Robinson,  36  Hun,  622, 

'■'Laws    of   1S75,    chap.   611,  §  22;  37   id.   341;    Hornor  v.   Henning,qs 

the   language   of    this  section    "the  U.  S.  228. 

directors  of  such  corporation  creating  6  Tallmadge  v ■.    The  Fishkill  Iron 

such  indebtedness,"  etc.  Co.,  4  Barb.  382. 

3  Laws  of  1853,  chap.  117,  §  23.  1  McComb    v.     Kellogg,     Sup.     Ct. 

4  Laws  of  1861,  chap.  149,  §  2.  Genl.  Term,  1  N.  Y.  Supp.  206. 

5  Corning  v.  McCullongh,  1  N.  Y.  8  Mc Clave  v.    Thompson,   36   Hun, 
47;     Story  v.    Furmati,   25   id.    214;  365. 


180  THE   LAW    OF   CORPORATIONS. 

establish  the  excess  of  indebtedness  over  capital,  and  in 
order  that  all  may  participate  ratably  in  the  distribution.1 

In  estimating  the  indebtedness,  bonds  still  in  the  treasury 
of  the  company  do  not  comprise  a  part  of  it  ;3  nor  does  a 
judgment  against  the  company  in  favor  of  a  co-trustee.3 

In  the  case  of  Patterson  v.  Robinson,1  where  the  debts  of 
a  corporation  exceeded  its  capital,  but  an  arrangement  was 
made  by  certain  of  the  trustees  of  the  company  with  the 
creditors  to  suspend  such  indebtedness  and  go  on  with  the 
business,  and  apply  the  proceeds  of  its  manufactures  to  cur- 
rent expenses,  and  no  part  to  such  suspended  debt  until  all 
outstanding  subsequent  claims  were  paid,  it  was  held  that  a 
bank  receiving  notes  and  drafts  of  such  a  company  subse- 
quently drawn  could  not  hold  them,  after  presentation  and 
payment,  on  account  of  the  former  indebtedness,  and  by 
that  means  increase  the  debts  of  such  company  beyond  its 
capital,  and  thus  render  the  trustees  liable  for  them. 

Liability  for  Debts  Generally. — The  officers  of  driving-park 
associations  are  jointly  and  severally  liable  for  every  debt  of 
such  associations  contracted  while  they  are  officers  thereof, 
provided  a  suit  for  its  collection  be  brought  within  one  year 
after  it  becomes  due.6 

The  act  for  the  incorporation  of  trust  companies  pro- 
vides that  for  all  losses  of  money  which  the  capital  stock 
shall  not  be  sufficient  to  satisfy,  the  trustees  shall  be  respon- 
sible in  the  same  manner  and  to  the  same  extent  that  trus- 
tees are  responsible  in  law  or  equity.6 

1  Anderson  v.  Sheers,  21  Hun,  568.  is  stated  in  the  dissenting  opinion  in 

In  Chambers  v.  Lewis,  28  N.  Y.  454,  the  case. 

there  is  a  remark  to  the  effect  that  a  2  McClave'y.    Thompson,   36  Hun, 

trustee  would  be   liable  to  a  single  365. 

creditor  if  that  creditor  alleged  in  his  3  Knox  v.  Baldwin,  80  N.  Y.   610; 

complaint  that  the  excess  of  indebt-  McClave  v.  Thompson,  36   Hun,  365. 

edness  over  capital  was  equal  to  or  4  116  N.  Y.  193. 

exceeded    his    debt.      This    decision  5  Laws  of  1872,  chap.  248,  §  8. 

was  on  a  demurrer  which  was  sus-  6  Laws  of   18S7,  chap.   546,  §  30 ; 

tained,    but    it   could   as   well   have  see,  as  to  liability  independently  of 

been  sustained  on  other  grounds,  as  statute,  ante,  p.  178. 


THE   LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     l8l 

Where  the  capital  of  a  fire-insurance  company  or  of  a 
marine-insurance  company  becomes  impaired,  and  the 
Superintendent  of  the  Insurance  Department  directs  the 
officers  of  such  a  company  to  require  the  stockholders 
thereof  to  pay  in  the  amount  of  such  deficiency  within  a 
period  named,  in  the  event  of  any  additional  losses  accruing 
upon  risks  taken  after  the  expiration  of  the  period  so  lim- 
ited, and  before  the  deficiency  has  been  made  up,  the  direc- 
tors of  such  a  company  are  individually  liable  to  the  extent 
of  such  losses.1 

Miscellaneous  Liabilities  and  Prohibitions. — It  is  a  misde- 
meanor, punishable  by  fine  and  imprisonment,  for  any  direc- 
tor or  officer  of  a  railroad  corporation  to  sell  or  to  agree  to 
sell,  or  to  be  directly  or  indirectly  interested  in  the  sale  or 
agreement  to  sell,  any  shares  of  the  stock  of  the  corpora- 
tion of  which  he  is  such  officer  or  director,  unless  at  the  time 
of  the  sale  or  agreement  to  sell  he  is  the  actual  owner  of 
such  shares;2  or  for  such  director  or  officer  to  vote  for,  sign 
or  certify  to  any  bond  secured  by  mortgage  or  pledge  of  the 
corporate  property,  without  the  issue  thereof  having  been 
sanctioned  by  a  majority  in  amount  of  its  stockholders, 
voting  in  person  or  by  proxy  at  a  meeting  duly  called  for 
that  purpose.3 

A  person  who  signs  the  name  of  a  fictitious  person  to 
any  subscription  for,  or  agreement  to  take,  stock  in  any  cor- 
poration, existing  or  proposed  ;  and  a  person  who  signs,  to 
any  subscription  or  agreement,  the  name  of  any  person, 
knowing  that  such  person  does  not  intend  in  good  faith  to 
comply  with  the  terms  thereof,  or  under  any  understanding 
or  agreement  that  the  terms  of  such  subscription  or  agree- 
ment are  not  to  be  complied  with  or  enforced,  is  guilty  of  a 
misdemeanor.4 

1  Laws  of   1853,  chap.  466,  §  24,      subdiv.  10,  as  amended  by  Laws  of 
and  Laws  of  1866,  chap.  577.  1S87,  chap.  724. 

2  Laws  of  1884,  chap.  223.  4  Penal  Code,  §  590. 

3  Laws  of   1850,  chap.   140,  §  28, 


182  THE    LAW   OF   CORPORATIONS. 

An  officer,  agent  or  other  person  in  the  service  of  any 
joint-stock  company,  or  corporation  formed  or  existing  under 
the  laws  of  this  state,  or  of  the  United  States,  or  of  any  state 
or  territory  thereof,  or  of  any  foreign  government  or  coun- 
try, who  wilfully  and  knowingly,  with  intent  to  defraud, 
either — 

i.  Sells,  pledges  or  issues,  or  causes  to  be  sold,  pledged 
or  issued,  or  signs  or  executes,  or  causes  to  be  signed  or 
executed,  with  intent  to  sell,  pledge  or  issue,  or  to  cause  to 
be  sold,  pledged  or  issued,  any  certificate  or  instrument  pur- 
porting to  be  a  certificate  or  evidence  of  the  ownership  of 
any  share  or  shares  of  such  company  or  corporation,  or  any 
bond  or  evidence  of  debt,  or  writing  purporting  to  be  a  bond 
or  evidence  of  debt  of  such  company  or  corporation,  without 
being  first  thereto  duly  authorized  by  such  company  or  cor- 
poration, or  contrary  to  the  charter  or  laws  under  which 
such  corporation  or  company  exists,  or  in  excess  of  the 
power  of  such  company  or  corporation,  or  of  the  limit  im- 
posed by  law  or  otherwise  upon  its  power  to  create  or  issue 
stock  or  evidences  of  debt ;  or 

2.  Re-issues,  sells,  pledges  or  disposes  of,  or  causes  to  be 
re-issued,  sold,  pledged  or  disposed  of,  any  surrendered  or 
cancelled  certificates,  or  other  evidence  of  the  transfer  or 
ownership  of  any  such  share  or  shares, — 

Is  punishable  by  imprisonment  for  not  less  than  three 
years  nor  more  than  seven  years,  or  by  a  fine  not  exceeding 
three  thousand  dollars,  or  by  both.1 

An  officer,  agent  or  clerk  of  a  corporation,  or  of  persons 
proposing  to  organize  a  corporation  or  to  increase  the  cap- 
ital stock  of  a  corporation,  who  knowingly  exhibits  a  false, 
forged  or  altered  book,  paper,  voucher,  security  or  other  in- 
strument of  evidence  to  any  public  officer  or  board  autho- 
rized by  law  to  examine  the  organization  of  such  corpora- 
tion, or  to  investigate  its  affairs,  or  to  allow  an  increase  of 

1  Penal  Code,  §  591. 


THE   LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     1 83 

its  capital,  with  intent  to  deceive  such  officer  or  board  in 
respect  thereto,  is  punishable  by  imprisonment  in  a  state 
prison  not  exceeding  ten  years  and  not  less  than  three  years.1 

A  person  who,  without  authority,  subscribes  the  name  of 
another  to,  or  inserts  the  name  of  another  in,  any  prospectus, 
circular  or  other  advertisement  or  announcement  of  any  cor- 
poration or  joint-stock  association  existing  or  intended  to 
be  formed,  with  intent  to  permit  the  same  to  be  published, 
and  thereby  to  lead  persons  to  believe  that  the  person  whose 
name  is  so  subscribed  is  an  officer,  agent,  member  or  pro- 
moter of  such  corporation  or  association,  is  guilty  of  a  mis- 
demeanor.2 

A  director  of  a  stock  corporation  who  concurs  in  any 
vote  or  act  of  the  directors  of  such  corporation,  or  any  of 
them,  by  which  it  is  intended — 

1.  To  make  a  dividend,  except  from  the  surplus  profits 
arising  from  the  business  of  the  corporation,  and  in  the 
cases  and  manner  allowed  by  law ;  or 

2.  To  divide,  withdraw,  or  in  any  manner  pay  to  the 
stockholders,  or  any  of  them,  any  part  of  the  capital  stock 
of  the  corporation  ;  or  to  reduce  such  capital  stock  without 
the  consent  of  the  legislature  ;  or 

3.  To  discount  or  receive  any  note  or  other  evidence  of 
debt  in  payment  of  an  instalment  of  capital  stock  actually 
called  in  and  required  to  be  paid,  or  with  intent  to  provide 
the  means  of  making  such  payment ;  or 

4.  To  receive  or  discount  any  note  or  other  evidence  of 
debt  with  intent  to  enable  any  stockholder  to  withdraw  any 
part  of  the  money  paid  in  by  him  on  his  stock ;  or 

5.  To  apply  any  portion  of  the  funds  of  such  corpora- 
tion, except  surplus  profits,  directly  or  indirectly,  to  the 
purchase  of  shares  of  its  own  stock  ;  or 

6.  To  receive  any  such  shares  in  payment  or  satisfaction 
of  a  debt  due  to  such  corporation  ;  or 

1  Penal  Code,  §  592.  2  Id.  §  593. 


1 84  THE   LAW   OF   CORPORATIONS. 

7.  To  receive  in  exchange  for  the  shares,  notes,  bonds  or 
other  evidences  of  debt  of  such  corporation,  shares  of  the 
capital  stock,  or  notes,  bonds  or  other  evidences  of  debt 
issued  by  any  other  stock  corporation, — 

Is  guilty  of  a  misdemeanor.1 

A  director  of  a  corporation,  organized  under  the  laws  of 
this  state,  having  banking  powers,  who  concurs  in  any  vote 
or  act  of  the  directors  of  such  corporation,  or  any  of  them, 
by  which  it  is  intended,  either — 

•1.  To  make  a  loan  or  discount,  by  which  the  whole 
amount  of  the  loans  and  discounts  of  the  corporation  shall 
be  greater  than  the  amount  allowed  by  law,  or,  where  there 
is  no  express  statutory  limitation  of  the  amount,  greater 
than  three  times  its  capital  stock  then  paid  in  and  actually 
possessed ;  or 

2.  To  make  a  loan  or  discount  to  any  director  of  such 
corporation,  or  upon  paper  upon  which  any  such  director  is 
responsible,  to  an  amount  exceeding  the  amount  allowed 
by  statute,  or,  where  there  is  no  express  statutory  limitation 
of  the  amount,  exceeding  in  the  aggregate  one-third  of  the 
capital  stock  of  such  corporation,  then  paid  in  and  actually 
possessed, — 

Is  guilty  of  a  misdemeanor.2  But  this  will  not  render 
any  loan  made  by  the  directors  of  any  such  corporation,  in 
violation  thereof,  invalid.3 

An  officer  or  agent  of  any  corporation  having  banking 
powers  who  sells,  or  causes  or  permits  to  be  sold,  any  bank 
notes  of  such  corporation,  or  pledges,  or  hypothecates,  or 
causes  or  permits  to  be  pledged  or  hypothecated,  with  any 
other  corporation,  association  or  individual,  any  such  notes,  as 
a  security  for  a  loan  or  for  any  liability  of  such  corporation  ; 4 
or  who  issues  or  puts  in  circulation,  or  causes  or  permits  to 
be  issued  or  put  in  circulation,  the  bank  notes  of  such  cor- 


1  Penal  Code,  §  594-  3  Id-  §  59&- 

2  Id.  §  595.  4 Id-  §  597- 


THE   LIABILITIES   OF   OFFICERS   AND   DIRECTORS.     185 

poration  to  an  amount  which,  together  with  previous  issues, 
leaves  in  circulation  or  outstanding  a  greater  amount  of  notes 
than  such  corporation  is  allowed  by  law  to  issue  and  circulate, 
is  punishable  by  imprisonment  in  a  county  jail  not  exceeding 
one  year,  or  by  a  fine  not  exceeding  five  thousand  dollars, 
or  both.1 

An  officer  or  agent  of  any  banking  corporation  who 
makes  or  delivers  any  guaranty  or  endorsement  on  behalf 
of  such  corporation  whereby  it  may  become  liable  on  any 
of  its  discounted  notes,  bills  or  obligations  in  a  sum  beyond 
the  amount  of  loans  and  discounts  which  such  corporation 
may  legally  make,  is  guilty  of  a  misdemeanor.8 

An  officer,  agent,  teller  or  clerk  of  any  banking  associa- 
tion or  savings-bank,  who  knowingly  overdraws  his  account- 
with  such  bank,  and  thereby  wrongfully  obtains  the  money, 
notes  or  funds  of  such  bank,3  or  who  receives  any  deposits 
knowing  that  such  bank  or  association  is  insolvent,  is  guilty 
of  a  misdemeanor.4 

A  director,  officer  or  agent  of  any  corporation  or  joint- 
stock  association  who  knowingly  receives  or  possesses  him- 
self of  any  property  of  such  corporation  or  association 
otherwise  than  in  payment  of  a  just  demand,  and,  with 
intent  to  defraud,  omits  to  make,  or  to  cause  or  direct  to 
be  made,  a  full  and  true  entry  thereof,  in  the  books  or 
accounts  of  such  corporation  or  association ;  and  a  director, 
officer,  agent  or  member  of  any  corporation  or  joint-stock 
association  who,  with  intent  to  defraud,  destroys,  alters, 
mutilates  or  falsifies  any  of  the  books,  papers,  writings  or 
securities  belonging  to  such  corporation  or  association,  or 
makes  or  concurs  in  making  any  false  entry,  or  omits  or 
concurs  in  omitting  to  make  any  material  entry  in  any  book 
of  accounts,  or  other  record  or  document  kept  by  such  cor- 
poration or  association,  is  punishable  by  imprisonment  in  a 


1  Penal  Code,  §  598.  3  Id.  §  600. 

»  Id.  §  599.  4  Id.  §601. 


1 86  THE   LAW    OF   CORPORATIONS. 

state  prison  not  exceeding  ten  years  and  not  less  than  three 
years,  or  by  imprisonment  in  a  county  jail  not  exceeding  one 
year,  or  by  a  fine  not  exceeding  five  hundred  dollars,  or  by 
both  such  fine  and  imprisoment.1 

A  director,  officer  or  agent  of  any  corporation  or  joint- 
stock  association  who  knowingly  concurs  in  making  or  pub- 
lishing any  written  report,  exhibit  or  statement  of  its  affairs 
or  pecuniary  condition,  containing  any  material  statement 
which  is  false,  other  than  such  as  are  elsewhere  by  the  Penal 
Code  specially  made  punishable,  is  guilty  of  a  misdemeanor.2 

The  insolvency  of  a  moneyed  corporation  is  deemed 
fraudulent  unless  its  affairs  appear,  upon  investigation,  to 
have  been  administered  fairly,  legally,  and  with  the  same 
care  and  diligence  that  agents  receiving  a  compensation  for 
their  services  are  bound  by  law  to  observe.3 

In  every  case  of  the  fraudulent  insolvency  of  a  moneyed 
corporation,  every  director  thereof  who  participated  in  such 
a  fraud,  if  no  other  punishment  is  prescribed  therefor  by  the 
Penal  Code  or  an)-  special  statute,  is  guilty  of  a  misde- 
meanor.4 

A  director  of  any  moneyed  corporation  who  wilfully 
does  any  act,  as  such  director,  which  is  expressly  forbidden 
by  law,  or  wilfully  omits  to  perform  any  duty  expressly  im- 
posed upon  him  as  such  director  by  law,  the  punishment  for 
which  act  or  omission  is  not  otherwise  prescribed  by  the 
Penal  Code  or  by  some  special  statute,  is  guilty  of  a  mis- 
demeanor.5 

A  director  of  a  corporation  or  joint-stock  association  is 
deemed  to  have  such  a  knowledge  of  the  affairs  of  the  corpo- 
ration or  association  as  to  enable  him  to  determine  whether 
any  act,  proceeding  or  omission  of  its  directors  is  a  violation 
of  these  provisions.6 

A  director  of    a   corporation   or  joint-stock    association 

1  Penal  Code,  §  602.  4  Id.  §  605. 

2  Id.  §603.  6  Id.  £606. 

3  Id.  §  604.  6  Id.  §  609. 


THE   LIABILITIES   OF   OFFICERS   AND    DIRECTORS.     1 87 

who  is  present  at  a  meeting  of  the  directors  at  which  any 
act,  proceeding  or  omission  of  such  directors  in  violation  of 
these  provisions  occurs  is  deemed  to  have  concurred  therein, 
unless  he  at  the  time  causes,  or  in  writing  requires,  his  dis- 
sent therefrom  to  be  entered  in  the  minutes  of  the  directors  ; ' 
and  although  not  present  at  such  a  meeting  of  the  directors, 
he  will  be  deemed  to  have  concurred  therein  if  the  facts 
constituting  such  violation  appear  on  the  record  or  minutes 
of  the  proceedings  of  the  board  of  directors,  and  he  remains 
a  director  of  the  same  company  for  six  months  thereafter 
without  causing,  or  in  writing  requiring,  his  dissent  from 
such  illegality  to  be  entered  in  the  minutes  of  the  directors.2 

A  director,  trustee  or  other  officer  of  a  joint-stock  asso- 
ciation or  corporation,  upon  whom  a  notice  of  application 
for  an  injunction  affecting  the  property  or  business  of  such 
joint-stock  association  or  corporation  is  served,  who  omits  to 
disclose  to  the  other  directors,  officers  or  managers  thereof 
the  fact  of  such  service,  and  the  time  and  place  of  such  ap- 
plication, is  guilty  of  a  misdemeanor.3 

It  is  no  defence  to  a  prosecution  for  a  violation  of  these 
provisions  that  the  corporation  was  one  created  by  the  laws 
of  another  state,  government  or  country,  if  it  carried  on 
business,  or  kept  an  office  therefor,  within  this  state.4 

The  term  "  director,"  as  here  used,  embraces  any  of  the 
persons  having  by  law  the  direction  or  management  of  the 
affairs  of  a  corporation,  by  whatever  name  such  persons  are 
described  in  its  charter  or  are  known  in  law.5 

1  Penal  Code,  §  610.  4  Id.  §  613. 

2  Id. §611.  *  Id.  §614. 

3  Id.  S612. 


THE   LAW   OF   CORPORATIONS. 


CHAPTER  VI. 
THE  RIGHTS  OF  STOCKHOLDERS. 

QUESTIONS  regarding  the  rights  of  stockholders  oftenest 
come  before  the  courts  on  applications  addressed  to  the 
equitable  power  of  the  courts  to  enforce  such  rights.  There 
are,  however,  certain  statutory  rights,  and  summary  methods 
of  relief,  given  in  certain  cases  which  form  the  subject  of 
this  chapter. 

Right  to  Certificate  of  Stock. — Unless  the  act  of  incorpora- 
tion or  the  by-laws  of  a  company  require  it,  a  certificate  of 
stock  is  not  necessary  to  constitute  one  a  stockholder.  En- 
tering the  name  of  a  subscriber  on  the  books  of  a  company 
as  a  stockholder  is  sufficient.1 

In  case,  however,  of  the  loss  or  destruction  of  a  certifi- 
cate of  stock  of  a  corporation  organized  under  the  laws  of 
this  state,  the  owner,  or  his  legal  representatives,  may  ap- 
ply at  a  Special  Term  of  the  Supreme  Court  in  the  judicial 
district  where  he  resides  for  an  order  requiring  the  corpora- 
tion to  show  cause  why  it  should  not  be  required  to  issue 
a  new  certificate  of  stock  in  place  of  the  one  so  lost  or  de- 
stroyed. 

The  application  must  be  by  petition,  duly  verified  by 
the  owner,  in  which  shall  be  stated  the  name  of  the  corpora- 
tion, the  number  and  date  of  the  certificate  if  known,  or  if 
it  can  be  ascertained  by  the  petitioner,  the  number  of  shares 
of  stock  named  therein  and  to  whom  issued,  and  as  particu- 
lar a  statement  of  the  circumstances  attending  such  loss  or 

1  Thorp  v.    Woodhull,  I  Sand.  Ch.  N.  Y.  &>  N.  H.  R.  R.  Co.  v.  Schuyler, 

411;    Van  Allen  v.    Illinois  Cent.  R.  34    id.   30;  Rutter  v.   Kilpatrick,   63 

R.    Co.,  2    Keyes,  673;  Buffalo,  etc.,  id.  604. 
R.   R.   Co.  v.  Dudley,  14  N.  Y.  336; 


THE    RIGHTS   OF   STOCKHOLDERS.  1 89 

destruction  as  the  petitioner  may  be  able  to  give.  Upon 
the  presentation  of  said  petition,  the  court  will  make  an  or- 
der requiring  such  corporation  to  show  cause,  at  a  time  and 
place  therein  mentioned,  why  it  should  not  be  required  to 
issue  a  new  certificate  of  stock  in  place  of  the  one  described 
in  the  petition.  A  copy  of  such  petition  and  order  must 
be  served  upon  the  president  or  other  head  of  such  cor- 
poration, or  on  the  cashier,  secretary  or  treasurer  thereof, 
personally,  at  least  ten  days  before  the  time  designated  in 
the  order  for  showing  cause.1 

At  the  time  and  place  specified  in  the  order,  and  on 
proof  of  due  service  thereof,  the  court  will  proceed  in  a  sum- 
mary manner  and  in  such  mode  as  it  may  deem  advisable  to 
inquire  into  the  truth  of  the  facts  stated  in  the  petition,  and 
to  hear  such  proofs  and  allegations  as  may  be  offered  by  or 
in  behalf  of  the  petitioner,  or  by  or  in  behalf  of  the  corpora- 
tion or  other  party,  relative  to  the  subject-matter  of  inquiry, 
and  if,  upon  such  inquiry,  the  court  shall  be  satisfied  that 
such  petitioner  is  the  lawful  owner  of  the  number  of  shares 
of  the  capital  stock,  or  any  part  thereof,  described  in  the  pe- 
tition, and  that  the  certificate  therefor  has  been  lost  or  de- 
stroyed and  cannot  after  due  diligence  be  found,  and  that 
no  sufficient  cause  has  been  shown  why  a  new  certificate 
should  not  be  issued  in  place  thereof,  it  will  make  an  order 
requiring  such  corporation  or  other  party,  within  such  time 
as  shall  be  therein  designated,  to  issue  and  deliver  to  such 
petitioner  a  new  certificate  for  the  number  of  shares  of  the 
capital  stock  of  such  corporation  which  shall  be  specified  in 
the  order  as  owned  by  the  petitioner,  and  the  certificate  for 
which  shall  have  been  lost  or  destroyed.  In  making  such 
order  the  court  will  direct  that  the  petitioner  deposit  such 
security,  or  file  such  a  bond  in  such  form  and  with  such 
sureties,  as  to  the  court  shall  appear  sufficient  to  indemnify 
any  person  other  than  the  petitioner  who  shall  thereafter 

1  Laws  of  1873,  chap.  151,  §  1. 


I90  THE   LAW   OF   CORPORATIONS. 

appear  to  be  the  lawful  owner  of  such  certificate  stated  to 
be  lost  or  stolen  ;  and  the  court  may  also  direct  the  publi- 
cation of  such  notice,  either  preceding  or  succeeding  the 
making  of  such  final  order,  as  it  shall  deem  proper.  Any 
person  or  persons  who  shall  thereafter  claim  any  rights  un- 
der such  certificate  so  alleged  to  have  been  lost  or  destroyed 
shall  have  recourse  to  such  indemnity,  and  the  corporation 
shall  be  discharged  of  and  from  all  liability  to  such  person 
or  persons  by  reason  of  compliance  with  such  order ;  and 
obedience  to  the  order  may  be  enforced  by  the  court  by  at- 
tachments against  the  officer  or  officers  of  such  corporation, 
on  proof  of  his  or  their  refusal  to  comply  with  the  same. ' 

This  is  not  the  proper  proceeding  in  case  there  is  any 
controversy  as  to  the  ownership  of  the  shares.  To  entitle 
him  to  the  order  it  must  appear  that  the  petitioner  is  the 
legal  owner  of  the  shares  and  that  the  certificate  has  been 
lost  or  destroyed.2 

Compelling  Transfer. — Mandamus  will  not  lie  to  compel  a 
corporation  to  transfer  stock  on  its  books.3  The  common 
remedy  for  a  refusal  on  the  part  of  the  corporation  to  make 
such  transfer  is  an  action  for  damages;4  but  where  adequate 
relief  cannot  be  obtained  in  this  manner,  as,  for  instance, 
where  the  stock  is  of  little  value  and  the  purchaser  desires 
to  hold  it  as  an  investment,  he  may  bring  an  equitable  ac- 
tion to  compel  its  transfer  on  the  books  of  the  company.5 

A  corporation  may  defend  an  action  to  compel  the  issue 
of  a  certificate  by  showing  that  plaintiff  is  only  a  trustee  for 
the  real  owner.6 

Where  the   act  of  incorporation  provides,  as  does  the 

1  Laws  of  1873,  chap.  151,  §  2.  People  v.  Parker,  10  How.  544. 

'2  Matter   of   Biglin   v.    Friendship  4  Com.   Bank  of  Buffalo   v.  Kort- 

Assn.,  46  Hun,  223.  right,    22    Wend.    34S;    Holbrook  v. 

3  People  v.  Brandon,   Sup.  Ct.  Sp.  N.J.  Zinc  Co.,  57  N.  Y.  616. 

Term,  Lawrence,  J.,  Daily  Reg.  Dec.  6  Cushman  v.  Thayer  Mfg.  Jexvelry 

II,  1889;  citing  Kortright  v.  Buffalo  Co.,  76  N.  Y.  365. 

Com.     Co.,    20    Wend.    90;    Matter  6  Jackson  v.    Twenty-Third    Street 

of  Firemen's   Ins.   Co.,  6    Hill,  243;  By.  Co.,  88  N.  Y.  520. 


THE   RIGHTS    OF   STOCKHOLDERS.  191 

Manufacturing  Act,  that  no  transfers  shall  be  valid  until  en- 
tered on  the  books  of  the  company,  a  vendor  of  stock  con- 
tinues the  nominal  owner  until  the  transfer  is  completed  on 
the  books;1  and  if  transferred  by  him  fraudulently  to  a  bona 
fide  purchaser,  such  purchaser  would  get  a  good  title,  al- 
though the  corporation  might  be  liable  to  a  prior  vendee  if 
it  negligently  allowed  a  transfer  of  the  stock  on  its  books 
without  requiring  a  delivery  of  the  certificate  for  cancella- 
tion ;2  and  the  same  is  true  where  it  transfers  stock  after 
notice  of  an  adverse  claim  ;3  and  where  the  act  of  incorpora- 
tion does  not  contain  a  provision  that  a  transfer  can  be  made 
only  on  the  books,  an  assignment  of  stock  and  payment  of 
dividends  to  the  assignee  will  constitute  a  valid  transfer  of 
such  stock.4 

Right  to  Dividends — A  stockholder  has  no  legal  right  to 
any  of  the  property  or  of  the  profits  of  a  corporation  until  a 
division  is  made.  It  is  immaterial  from  what  source  or 
during  what  time  the  funds  divided  were  acquired  by  the 
corporation,5  and  it  is  justified  in  continuing  to  pay  divi- 
dends to  the  person  in  whose  name  the  stock  stands  on  its 
books,  or  to  his  legal  representatives,  until  notified  of  the 
transfer  f  but  after  notification  of  a  transfer  of  the  stock  it 
is  liable  to  the  real  owner,  even  though  no  transfer  has  been 
made  on  the  books  of  the  company.7 

Where  a  person  claims  to  be  a  stockholder  but  is  not 
recognized  as  such  by  the  corporation,  and  he  brings  an 
action  against  the  corporation  for  the  conversion  of  his 
shares,  he  cannot,  during  the  pendency  of  such  an  action,  sue 
it  for  dividends.8 

1  Johnson    v.  Underhill,   52   N.  Y.  5  Hyatt    v.   Allen,   56    N.  Y.    553; 
203.                                                                 Jermain  v.  Lake  Shore   &*  Mich.  So. 

2  N.   V.   &>   N.    H.   R.   R.   Co.    v.      Ry.  Co.,  91  id.  4S3. 

Schuyler,   34  N.  Y.  30.  6  Brisbane  v.    Del. ,    Lack.   &    W. 

3  Hawes  v.  Gas  Consumers'  Benefit     R.  R.  Co.,  94  N.  Y.  204. 

Co.,  Com.  Pleas,  Genl.  Term,  9  N.Y.  7  Robinson  v.  Arafl  Bank  of  New 

Supp.  490.  Berne,  95  N.  Y.  637. 

4  Cutting    v.    Damerel,    8S    N.  Y.  8  Hughes  v.  Vermont  Copper  Mitt' 
410.  ing  Co.,  72  N.  Y.  207. 


I92  THE  LAW   OF  CORPORATIONS. 

While,  as  a  general  rule,  the  officers  of  a  corporation  are 
the  sole  judges  of  the  propriety  of  declaring  dividends,  and 
the  courts  will  not  interfere  with  a  proper  exercise  of  their 
discretion,  yet  in  the  case  of  dividends  on  preferred  stock 
a  different  condition  of  affairs  sometimes  arises.  Certificates 
of  preferred  stock  usually  contain  provisions  that  dividends 
shall  be  paid  on  them  at  a  certain  rate  from  the  first  earnings 
of  the  company.  This  constitutes  a  contract  of  the  com- 
pany to  pay  the  dividend  guaranteed,  including  all  arrears 
of- dividends  before  holders  of  the  common  stock  are  enti- 
tled to  any,  and  this  right  may  be  enforced  by  an  equitable 
action  to  compel  the  directors  to  make  such  a  dividend.1 

If  stock  is  sold  after  a  dividend  is  declared  but  before 
it  is  payable,  the  dividend  belongs  to  the  owner  of  the  stock 
at  the  time  it  is  declared  ;2  and  the  same  rule  holds  even 
though  the  dividend  is  declared  payable  at  a  future  time  at 
the  option  of  an  agent  of  the  corporation.3 

Right  to  Examine  Books. — As  we  have  seen  in  a  former  chap- 
ter,4 corporations  are  required  to  keep  certain  of  their  books 
open  to  the  inspection  of  their  stockholders  at  all  reasonable 
times  during  business  hours.  In  case  of  refusal  mandamus 
will  lie  to  compel  such  inspection,6  and  an  officer  of  a  corpo- 
ration unreasonably  refusing  to  allow  a  stockholder  to  ex- 
amine the  stock  transfer  books,  and  to  make  extracts  from 
them,  is  liable  to  the  penalty  prescribed  in  the  statutes.9 

The  law  will  receive  a  liberal  interpretation,  however,  and 
where  there  is  no  intention  of  excluding  a  stockholder  from 
an  examination  of  the  books,  the  penalty  will  not  be  enforced 
simply  on  account  of  a  technical  violation  of  the  law.7 

1  Boardman  v .  Lake  Shore  &•  Mich.  7  Thus  where  a  stockholder  visited 
So.  Ry.  Co.,  S4  N.  Y.  157.                         the   office    of   a  company  during  the 

2  Lombard  v.  Case,  45  Barb.  95.  temporary  absence  of  the   custodian 
a  Hill   v.    Newichawanick    Co.,    8      of  the  books  and  was  told  to  call  the 

Hun,  459  ;  aff'd,  71  N.  Y.  593.  next  business  day,  and  he  did,  when 

4  Chap.  IV,  ante.  •  he  examined  them,   it   was   held  that 

6  People  v.  Throop,   12  Wend.  183  ;  it  was  error  to  refuse  to  nonsuit  the 

Matter  of  Sage,   70  N.  Y.  220.  plaintiff  in  an  action  to  recover  the 

6  Cothealv.  Brouwer,  5  N.  Y.  562.  penalty.     Kelsey  v .  Pfaudler Process 


THE   RIGHTS   OF   STOCKHOLDERS.  193 

Wherever  stockholders,  in  a  company  organized  under 
the  Manufacturing  Act,  owning  five  per  cent,  of  the  capital 
stock  of  a  company  with  a  capital  not  exceeding  one  hun- 
dred thousand  dollars,  or  three  per  cent,  of  the  capital  stock 
of  a  company  with  a  capital  exceeding  that  amount,  present 
a  written  request  to  the  treasurer  of  such  company  that 
they  desire  a  statement  of  its  affairs,  it  is  the  duty  of  the 
treasurer  to  make  a  statement  of  the  affairs  of  such  com- 
pany under  oath,  embracing  a  particular  account  of  all  its 
assets  and  liabilities,  in  minute  detail,  and  to  deliver  such 
statement  to  the  person  presenting  such  request  within 
twenty  days  thereafter.  At  the  same  time  he  must  place 
and  keep  on  file  in  his  office,  for  six  months  thereafter,  a 
copy  of  such  statement,  which,  at  all  times  during  business 
hours,  must  be  exhibited  to  any  stockholder  demanding  an 
examination  of  it. 

Such  a  statement  shall  not  be  demanded,  however, 
oftener  than  once  in  six  months. 

If  a  treasurer  of  such  a  company  neglects  or  refuses  to 
comply  with  these  requirements,  he  is  liable  to  a  penalty  of 
fifty  dollars,  and  a  further  sum  of  ten  dollars  for  every  twenty- 
four  hours  thereafter  until  such  statement  is  furnished.1 

If  no  such  statement  has  been  demanded  during  the  year 
preceding  the  annual  meeting  of  the  stockholders  for  the 
election  of  directors,  it  is  the  duty  of  the  treasurer  to  pre- 
pare and  exhibit  a  general  statement  of  the  assets  and  lia- 
bilities of  the  company  at  such  meeting.2 

Any  stockholder  of  a  corporation  organized  under  the 
Business  Act,3  or  a  stockholder  of  a  title  guaranty  com- 
pany,1 may  at  all   reasonable   times,  either  in   person  or  by 

Co.  41  Hun,  20.     Upon  a  subsequent  of  the  right  when  it  accrued.     S.  C. 

trial  of  this  case,  when  it  appeared  3  N.  Y.  Supp.  723. 
that  the  custodian  of  the   books  was  '  Laws    of    1854,    chap.    201,    and 

present  at  the  office  at  the  time  the  Laws  of  1S62,  chap.  472,  £  1. 
request  to  examine  them  was  made,  2  Laws  of  1862,  chap.  472,  §  2. 

a   judgment    for    plaintiff   was    sus-  3  Laws  of  1875,  chap.  611,  §  16. 

tained.  and  it  was  held  that  the  sub-  4  Laws  of  18S5,   chap.  538,  §  16. 

sequent  examination  was  no  waiver 


194  THE   LAW   OF   CORPORATIONS. 

attorney,  examine  the  records  and  books  of  account  of  such 
corporations. 

Except  as  provided  by  statute,  the  right  on  the  part  of 
a  stockholder  to  demand  an  examination  of  the  books  of  a 
company  is  not  absolute,  but  is  discretionary  with  the  court, 
and  will  be  granted  only  for  some  good  and  sufficient  reason 
shown ;  and  such  discretion,  when  exercised,  will  not  be  re- 
viewed by  the  Court  of  Appeals.1 

Rights  at  Elections.  —  Generally  speaking,  each  share  of 
stock  standing  on  the  books  of  a  company  is  entitled  to  a 
vote  at  all  elections  ;  and  married  women  may  vote,  at  elec- 
tions of  directors  or  trustees,  by  proxy  or  otherwise,  in  any 
company  organized  under  the  laws  of  this  state  in  which 
they  are  stockholders.2 

In  all  cases  where  the  right  of  voting  upon  any  share  of 
the  stock  of  any  incorporated  company  of  this  state  is  ques- 
tioned, it  is  the  duty  of  the  inspectors  of  the  election  to  re- 
quire the  transfer  books  of  such  company  as  evidence  of 
stock  held  ;  and  all  such  shares  as  may  appear  standing 
thereon  in  the  name  of  any  person  may  be  voted  upon 
either  in  person  or  by  proxy,  subject  to  the  provisions  of  the 
act  of  incorporation.3 

The  inspectors  who  may  be  appointed  to  conduct  an 
election  are  required  before  entering  on  the  duties  of  their 
appointment  to  take  or  subscribe  an  oath  or  affirmation  to 
the  effect  that  they  will  execute  the  duties  of  inspector  with 
strict  impartiality  and  according  to  the  best  of  their  ability.4 

If  at  any  time  the  election  for  directors  is  not  held  on 
the  day  designated  by  its  act  of  incorporation,  it  is  the  duty 
of  the  president  and  directors  to  cause  an  election  to  be 
held  within  sixty  days  thereafter;  and  at  such  election  no 
share  may  be  voted  on   except  by  such  persons  as  may  ap- 

1  People    ex    rel.    Hatch    v.    Lake  2  Laws  of  1851,  chap.   321,  §  1. 

Shore  &  Mich.    So.   R.    R.    Co.,  11  3  Rev.    Stat.,    part    I.   chap,    xviii. 

Hun,   1;    aff'd  sub  nom.     Matter  of  title  4,  §6. 

Sage,  70  N.  Y.  220.  4  Id.  §  7. 


THE   RIGHTS   OF   STOCKHOLDERS.  195 

pear  on  the  transfer  books  of  the  company  to  have  had  the 
right  to  vote  on  the  day  when  the  election  should  have  been 
held.1 

Upon  the  application  of  any  one  aggrieved  by,  or  complain- 
ing of,  any  election  or  any  proceeding,  act  or  matter  touch- 
ing the  same,  the  Supreme  Court,  upon  reasonable  notice 
given  to  the  adverse  party  or  to  those  who  are  to  be  affect- 
ed thereby,  may  proceed  in  a  summary  way  to  hear  the 
affidavits,  proofs  and  allegations  of  the  parties,  or  otherwise 
inquire  into  the  matters  or  causes  of  complaint,  and  there- 
upon to  establish  the  election  so  complained  of,  or  to  order  a 
new  election,  or  make  such  order  and  give  such  relief  in  the 
premises  as  right  and  justice  may  require. 

The  court  in  such  a  case  may  either  order  an  issue  or 
issues  to  be  made  up  in  such  manner  and  form  as  it  may 
direct,  in  order  to  try  the  respective  rights  of  the  parties  to 
the  office  or  franchise  in  question,  or  may  give  leave  to  ex- 
hibit or  direct  the  attorney-general  to  exhibit  an  informa- 
tion or  informations  in  the  nature  of  a  quo  warranto? 

The  Same.  Moneyed  Corporations. — At  every  election  of 
directors  of  a  moneyed  corporation  three  persons  must  be 
chosen  by  the  stockholders  as  inspectors  at  the  next  succeed- 
ing election.3  The  vacancies  in  the  office  of  such  inspectors 
are  filled  by  the  directors ; 4  but  in  no  case  may  a  director 
or  officer  be  chosen  as  an  inspector." 

Every  such  inspector  before  entering  on  the  duties  of 
his  office  must  take  and  subscribe  an  oath  that  he  will  exe- 
cute the  duties  of  his  office  with  strict  impartiality  and  ac- 
cording to  the  best  of  his  ability.6 

At  every  election  of  directors  the  transfer  books  of  the 
corporation  must  be  produced  to  test  the  qualifications  of 
the  voters,  and  no  person  be  permitted  to  vote  directly  or 
by  proxy  except  those  in  whose  names  shares   of  stock  of 

1  Rev.   Stat.,   part   1.   chap,   xviii.  4  Id.  §  196. 
title  4,  §  8.  5  Id.  §  197. 

2  Id.   §  5-  6  Id.   §  19S. 

3  Laws  of  1882,  chap.   409,  §  195. 


196  the  law  of.  corporations. 

the  corporation  shall  have  stood  for  at  least  thirty  days  pre- 
vious to  the  election.1 

At  such  elections  no  persons  can  vote  on  any  shares  of 
stock  belonging  to  or  hypothecated  to  the  corporation,  nor 
on  any  shares  hypothecated  or  pledged  as  collateral  securi- 
ty to  any  other  person  or  company ; 2  nor  on  any  shares 
which  have  been  transferred  to  him  for  the  sole  purpose  of 
enabling  him  to  vote  thereon  at  the  election  then  to  be  held  ; 
nor  upon  any  shares  which  he  shall  have  previously  con- 
tracted to  sell  or  transfer  after  the  election  upon  any  con- 
dition, agreement  or  understanding  in  relation  to  his  manner 
of  voting  at  such  election.3 

Any  person  offering  to  vote  may  be  challenged  by  any 
other  person  authorized  to  vote  at  the  same  election.  To 
any  person  so  challenged  one  of  the  inspectors  must  admin- 
ister the  following  oath : 

"You  do  swear  (or  affirm  as  the  case  may  be)  that  the, 
shares  on  which  you  now  offer  to  vote  do  not  belong  and 
are  not  hypothecated  to  the  (name  the  corporation  for 
which  the  election  is  held),  and  that  they  are  not  hypothe- 
cated or  belong  to  any  other  corporation  or  person  whatso- 
ever ;  that  such  shares  have  not  been  transferred  to  you  for 
the  purpose  of  enabling  you  to  vote  thereon  at  this  election 
and  that  you  have  not  contracted  to  sell  or  transfer  them 
upon  any  condition,  agreement  or  understanding  in  relation 
to  your  manner  of  voting  at  this  election."  4 

No  person  will  be  permitted  to  vote  on  the  proxy  of  a 
stockholder  unless  he  produce,  annexed  to  his  proxy,  an 
affidavit  of  such  stokholder  stating  the  same  facts  to  which 
the  oath  of  such  stockholder  might  have  been  required 
upon  a  challenge  had  he  offered  to  vote  in  person  upon  the 
shares  mentioned  in  the  proxy.5 

If   any  person  offering  to  vote  upon  a  proxy   is   chal- 

1  Laws  of  1882,  chap.  409,  §  199.  4  Id.  §  202. 

2  Id.  §  200.  5  Id.  §  203. 

3  Id.  §  201. 


THE   RIGHTS   OF   STOCKHOLDERS.  197 

lenged  by  an  elector  the  following  oath  must  be  adminis- 
tered to  him  by  one  of  the  inspectors: 

"  You  do  swear  (or  affirm)  that  the  facts  stated  in  the 
affidavit  annexed  to  the  proxy  upon  which  you  now  offer  to 
vote  are  true  according  to  your  belief,  and  that  you  have 
made  no  contract  or  agreement  whatever  for  the  purchase 
of  transfer  of  the  shares  or  any  portion  of  the  shares  men- 
tioned in  such  proxy."  ' 

If  any  person  duly  challenged  refuse  to  take  the  proper 
oath  his  vote  must  be  rejected  and  not  afterwards  received 
at  the  same  election  ;  if  he  take  the  oath  his  vote  must  be 
received.2 

If  any  election  in  any  moneyed  corporation  is  not 
held  on  the  day  appointed  by  law  it  is  the  duty  of  the 
directors  to  notify  and  cause  such  election  to  be  held  within 
sixty  days  after  the  day  appointed  ;  and  on  the  day  so  noti- 
fied no  person  will  be  admitted  to  vote  except  those 
who  would  have  been  entitled  had  the  election  taken  place 
on  the  day  when  by  law  it  ought  to  have  been  held.3 

If  any  person  conceive  himself  agrieved  by  an  election  or 
any  proceeding  concerning  an  election  of  directors  or 
officers  in  any  such  corporation,  he  may  apply  to  the 
Supreme  Cou-t  for  redress  giving  a  reasonable  notice  of  his 
intended  application  to  the  party  to  be  affected  thereby.4 

Upon  such  application  the  court  may  proceed  in  a  sum- 
mary way  to  hear  the  proofs  and  allegations  of  the  parties 
or  otherwise  to  inquire  into  the  cause  of  complaint  and 
thereupon  to  make  such  order  and  grant  such  relief  as  the  cir- 
cumstances and  justice  of  the  case  require.  If  the  election 
complained  of  is  set  aside  the  court  may  order  a  new 
election  at  such  time  and  place  as  it  may  appoint.5 

If  it  cannot  otherwise  arrive  at  a  satisfactory  result, 
the    court    may  order   an    issue  as  between  the  parties  to 

1  Laws  of  18S2,  chap.  409,  §  204.  4  Id.  §  210. 

2  Id.  §  205.  6  Id.  §211. 

3  Id.  §  206. 


I98  THE   LAW    OF   CORPORATIONS. 

be  made  up  in  such  manner  and  form  and  to  be  tried 
in  such  court  as  it  may  select ;  or  may  permit  or  direct  the 
attorney-general  to  file  an  information  in  the  nature  of 
a  quo  warranto  if  the  case  be  one  in  which  that  proceed- 
ing would  be  competent  and  effectual.1 

If  any  such  issue  is  ordered,  or  information  permitted  or 
directed  to  be  filed,  the  court  may  make  such  further  orders 
in  relation  to  the  time  and  mode  of  pleading,  the  examina- 
tion of  witnesses  or  the  parties,  the  production  of  books  and 
papers,  and  the  time  and  place  of  trial  or  hearing,  as  in  its 
judgment  may  seem  effectual  for  expediting  the  proceed- 
ings, saving  expense  to  the  parties,  and  causing  a  final 
determination  to  be  had  with  as  little  delay  as  the  nature  of 
the  controversy  will  permit.2 

The  Same.  Business  Corporations.  —  The  annual  election  of 
directors  of  corporations  organized  under  the  Business  Act 
must  be  held  at  such  time  and  place  as  is  designated  by  the 
by-laws  and  public  notice  of  such  meetings  must  be  pub- 
lished not  less  than  ten  days  previous  thereto  in  a  news- 
paper published  in  the  place  in  which  the  principal  business 
office  of  the  corporation  is  situated,  if  a  newspaper  be  pub- 
lished therein,  and  otherwise,  in  the  newspaper  published 
nearest  to  such  office. 

The  election  must  be  made  by  such  of  the  stockholders 
as  attend  for  that  purpose  either  in  person  or  by  proxy. 
No  person  may  vote  upon  the  proxy  of  a  stockholder  in 
any  such  corporation  after  the  lapse  of  eleven  months  from 
the  date  of  such  proxy,  unless  the  stockholder  specifies 
therein  that  it  is  to  continue  in  force  for  a  longer  time. 

All  elections  must  be  by  ballot,  and  each  stockholder 
is  entitled  to  as  many  votes  as  shall  equal  the  number 
of  his  shares  multiplied  by  the  number  of  directors  to  be 
elected,  and  he    may  distribute  his   vote  among   those   to 

1  Laws  of  1882,  chap.  409,  §  212.  -  Id.  §  213. 


THE   RIGHTS   OF  STOCKHOLDERS.  199 

be  voted  for  as  he  sees  fit.  And  the  persons  receiving 
the  greatest  number  of  votes  shall  be  directors.1 

By  this  system  of  cumulative  voting  all  the  votes  to 
which  any  stockholder  is  entitled  multiplied  by  the  whole 
number  of  directors  to  be  elected  may  in  his  discretion 
be  cast  for  one  director  or  divided  among  any  number.  It 
is  thus  possible  for  a  minority  of  the  stockholders  to  elect 
such  a  portion  of  the  directors  as  their  proportion  of  stock 
in  the  corporation  entitles  them  to. 

In  case  an  election  is  not  made  on  the  day  designated  it 
may  be  held  on  any  other  day  within  three  months  there- 
after upon  giving  notice  of  such  meeting  to  each  stock- 
holder by  mail  at  least  five  days  before  the  time.2 

Every  person  acting  as  an  inspector  of  elections  must, 
before  entering  upon  the  duties  of  his  office,  take  and 
subscribe  his  oath  or  affirmation  that  he  will  discharge 
the  duties  of  his  office  with  fidelity,  and  that  he  will  not  re- 
ceive any  vote  but  such  as  he  believes  to  be  legal. ' 

The  Same.  Title  Guaranty  Companies. — The  act  for  the  in- 
incorporation  of  title  guaranty  companies  contains  the  same 
provisions  regarding  elections  as  are  contained  in  the 
Business  Act.4 

The  Same.  Safe  Deposit  Companies. — The  act  for  the  in- 
corporation of  safe  deposit  companies  contains  the  pro- 
vision that  no  proxy  shall  be  voted  on  after  the  lapse  of 
eleven  months  unless  the  stockholder  shall  have  specified 
therein  that  it  is  to  continue  in  force  for  some  longer 
time.5 

The  Same.  Railroads. — In  the  elections  of  directors  of 
railroads  organized  under  chapter  one-hundred-and-forty  of 
Laws   of   1850,  each  stockholder  is  entitled  to  one  vote  per- 

1  Laws  of    1875,  chap.  611  §  26.  spectors  of  elections  chosen    by  the 

-  Id.  §  27.  stockholders  in  the  same  manner  as 

3  Id.  ^  2S.  directors  are  elected. 

4  Laws  of  1SS5,  chap.  538,  §  §  20,  5  Laws  of  1S75,  chap.  613,  §  3  as 
21,  23.  This  act  also  provides  (§  amended  by  Laws  of  1SS3,  chap. 
22),  that    there    shall    be    three    in-  338. 


200  THE   LAW   OF   CORPORATIONS. 

sonally  or  by  proxy  on  every  share  held  by  him  thirty  days 
previous  to  any  such  election.' 

Before  entering  upon  his  duties  each  inspector  of  elec- 
tions at  a  meeting  of  stockholders  of  any  railroad  company 
of  this  state,  must  take  and  subscribe  before  some  officer 
authorized  to  administer  oaths  an  oath  or  affirmation  that 
he  will  well  and  truly  do  and  perform  the  duties  of  the 
office  of  an  inspector  at  such  election,  according  to  the  best 
of  his  ability,  and  must  file  the  same  in  the  office  of  the 
clerk  of  the  county  in  which  such  election  shall  be  held, 
together  with  a  certificate  of  the  result  of  the  vote  taken 
at  such  meeting.2 

No  person  may  vote  or  issue  a  proxy  to  any  other 
person  to  vote  at  any  meeting  of  stockholders  or  bondhold- 
ers of  any  railroad  corporation  in  this  state  for  the  election 
of  directors  or  for  any  other  purpose  upon  any  stock  or 
bonds  where  the  certificates  are  not  in  his  possession  or 
under  his  control,  if  he  has  ceased  to  retain  the  title 
to  such  stock  or  bonds  as  owner  in  his  own  right  or  in 
his  capacity  of  executor,  administrator  or  trustee,  notwith- 
standing such  stock  or  bonds  may  still  stand  in  his  name 
on  the  books  of  such  corporation. 

No  person  having  the  right  to  vote  upon  stock  or  bonds 
shall  sell  his  vote  or,  for  any  valuable  consideration,  issue  a 
proxy  to  vote  upon  such  stock  or  bonds  to  any  person,  and 
any  one  offering  to  vote  upon  stock  or  bonds  registered  or 
standing  in  his  name  may  be  required  by  any  inspector  of 
election  to  take  and  subscribe  the  following  oath  or  affirma- 
tion : 

"  I  do  solemnly  swear  (or  affirm)  that  in  voting  at 
this  election  I  have  not  either  directly  or  impliedly  received 
any  promise  or  any  sum  of  money  or  anything  of  value 
whatever  to  influence  the  giving  of  my  vote  or  votes  at  this 
election;  and  that  I  have  not  sold  or  otherwise    disposed 

1  Laws    of    1850,  chap.  140.  §  5  as      and  Laws  of  1873,  chap.  7«>- 
amended  by  Laws  of  1854,  chap.  282  s  Laws  of  18S0,  chap.   510,  §  1. 


THE    RIGHTS   OF   STOCKHOLDERS.  201 

of  my  interest  in,  or  title  to,  any  share  or  bonds  in  respect 
to  which  I  offered  to  vote  at  this  election,  but  that  all  such 
shares  and  bonds  still  remain  in  my  possession  or  subject  to 
my  control." 

Any  person  offering  to  vote  as  agent,  attorney  or  proxy 
for  any  other  person  may  be  required  to  take  and  subscribe 
to  the  following  oath  or  affirmation : 

"  I  do  solemnly  swear  (or  affirm)  that  the  title  to  the  stock 
or  bonds  upon  which  I  now  offer  to  vote  is,  to  the  best 
of  my  knowledge  and  belief,  truly  and  in  good  faith,  vested 
in  the  persons  in  whose  name  they  now  stand,  and  that  the 
said  persons  still  retain  control  of  the  said  shares  and  bonds 
and  that  I  have  not  either  directly  or  indirectly  or  impliedly 
given  any  promise  or  any  sum  of  money  or  anything  of 
value  whatever  to  induce  the  giving  of  authority  to  vote 
upon  such  stock  or  bonds  to  me." 

The  inspectors  are  authorized  to  administer  these  oaths 
which,  with  the  proxies,  must  be  filed  in  the  office  of  the 
company.1 

A  majority  of  the  stockholders  of  a  railroad  company 
may  change  the  time  and  place  of  its  annual  meeting  to  any 
other  incorporated  village  or  city  in  the  State  of  New  York, 
in  which  the  executive  officer  of  the  company  is  located, 
to  some  day  in  the  month  of  December  preceding  the 
date  or  time  at  which  such  election  would  otherwise  have 
been  held.2 

The  Same.  Generally. — No  meeting  of  the  stockholders  of 
a  corporation  organized  under  the  laws  of  this  state  for  the 
election  of  directors  or  for  the  purpose  of  any  other  corpo- 
rate action  can  be  held  outside  of  the  state.3  Nor  can  a 
valid  election  be  held  unless  notice  is  given  to  the  stock- 
holders in  the  manner  prescribed  by  the  by-laws  of  the  cor- 

1  Laws  of  18S0,  chap.  510,  §  2.  3  Ormsby  v.  Vermont  Copper  Mining 

2  Laws   of    1885,  chap.  498.      See      Co.,  56  N.  Y.  623. 
also  Laws  of  1S81,  chap.  317. 


202  THE   LAW    OF   CORPORATIONS. 

poration,  or  the  act  under  which  it  is  organized.1  But  where 
no  particular  form  or  time  of  notice  is  thus  prescribed,  any 
actual  notice  is  sufficient.  Thus  a  written  notice  deposited 
in  the  postoffice,  will  in  the  absence  of  proof  showing  that 
all  stockholders  did  not  in  fact  receive  the  notice  so  sent  be 
presumed  to  have  been  received.2 

Where  no  elections  have  been  held,  and  there  is  no  pro- 
vision in  the  charter  or  by-laws  of  a  corporation  for  the 
officers  holding  over,  the  stockholders  may  meet  on  any 
regular  day  for  the  election  of  directors,  and  hold  such 
election,  although  no  notices  of  such  meeting  had  been 
sent.3 

At  all  elections  the  right  of  a  stockholder  to  vote  is 
determined,  subject  to  the  provisions  in  its  charter  or  by- 
laws, by  the  names  appearing  on  the  transfer  books,  and 
the  inspectors  cannot  go  beyond  the  names  there  appearing.4 

Most  of  the  acts  for  the  incorporation  of  companies, 
under  the  laws  of  this  state,  provide  that  executors,  admin- 
istrators, guardians  or  trustees,  shall  represent  the  shares 
of  stock  in  their  hands  at  all  meetings,  and  vote  as  stock- 
holders thereon  ;  but  even  in  the  absence  of  such  a  pro- 
vision they  are  entitled  to  vote  upon  the  stock  which  they 
represent."  The  pledgee  of  stock,  however,  stands  in  a 
different  position,  and  has  no  right  to  vote  upon  stock  held 
by  him  in  pledge,  unless  he  has  been  expressly  authorized 
to  do  so  and  to  transfer  the  stock  to  his  own  name  on  the 
transfer  books.6 

Where  Directors  wrongfully  hold  over. — Whenever  the 
directors  named  in  articles  of  association  of  any  corporation 

1  Matter  of  Long  Island  R.  P.  Co.,  5  Matter  of  North  Shore,  etc.,  Ferry 
19  Wend.  37;  People  v.  Batchclor,  22      Co.,  63  Barb.  556. 

N.  Y.  128.  6  McHenry  v .  feivett,    26  Hun,  453. 

2  People  ex  rel.  Swinburne  v.  Al-  This  case  was  reversed  on  the  ground 
bany  Medical  College,  26  Hun,  348  ;  solely  that  an  injunction  would  not 
aff'd  So  N.  Y.,  635.  lie  to  restrain  a  pledgee  from  voting 

3 People   v.  Twaddell,  18  Hun,  427.      on  stock    standing  in  his  name.      s. 
4  Matter  of  Barker,    6  Wend.  509.;      c,  90  N.  Y.  58. 
Strong  v .  Smith,  15  Hun,  222. 


THE   RIGHTS   OF   STOCKHOLDERS.  20$ 

organized  under  any  general  law  of  this  state,  neglect  or  refuse 
during  the  first  year  of  the  corporate  existence  to  adopt  the 
by-law  required  by  law  to  enable  stockholders  to  hold  the 
annual  election  for  directors,  and  where,  by  such  neglect,  the 
said  directors  hold  over  and  continue  to  be  directors  after  the 
expiration  of  the  first  year  of  the  corporate  existence,  all  acts 
and  proceedings  of  the  directors,  when  so  holding  over,  done 
for  and  in  the  name  of  the  company,  and  designed  to  charge 
upon  the  company  any  liability  or  obligation  for  the  past  ser- 
vices of  any  director  so  holding  over,  or  for  the  past  services 
of  any  officer  or  attorney  or  counsel  appointed  by  them,  such 
liability  or  obligation  is  considered  fraudulent  and  void.1 

When  directors  of  such  a  corporation  are  holding  over  by 
their  wrongful  neglect  of  duty  beyond  the  term  for  which 
they  were  appointed  or  elected,  and  an  action  has  been 
brought  against  the  company  by  the  procurement  of  any  of 
them  to  enforce  any  claim  or  obligation  declared  void  as 
above,  and  such  action  is  in  the  interest  or  for  the  benefit 
of  any  director  so  holding  over,  and  the  company  has  by 
their  connivance  made  default  in  such  action  or  consented 
to  the  validity  of  the  claim  or  obligation  so  sought  to  be 
enforced  against  the  company,  any  stockholder  of  the  com- 
pany may  apply  to  the  Supreme  Court,  by  affidavit,  setting 
forth  the  facts,  for  a  stay  of  proceedings  in  such  action,  and 
on  proof  of  the  facts  in  such  further  manner  and  upon  such 
notice  as  the  court  may  direct,  the  Supreme  Court  may  stay 
such  proceedings  or  set  aside  or  vacate  the  same,  or  grant 
such  other  relief  as  may  seem  proper,  and  which  will  not 
injuriously  affect  an  innocent  party  who,  without  notice  of 
such  wrong-doing  and  for  a  valuable  consideration,  has 
acquired  rights  under  such  proceedings.2 

Stockholders  may  Call  Meetings. — When  the  directors  of  a 
corporation  neglect  to  adopt  a  by-law  providing  for  the 
annual  election    of  directors  for  sixty  days  after  the  first 

1  Laws  of  1885,  chap.  489,  §  1.  2  Id.  §  2. 


204  THE   LAW   0F   CORPORATIONS. 

year  of  the  corporate  existence,  the  stockholders  may  elect 
directors  in  the  place  of  those  holding  over. 

The  stockholders  entitled  to  vote  for  directors  may 
meet  after  a  previous  notice  in  writing,  given  by  them  to 
all  stockholders  at  least  fifteen  days  before  such  meeting, 
of  the  time  and  place  when  and  where  such  meeting  will 
be  held  for  the  purpose  of  electing  directors ;  and  any 
officer  or  other  person  having  charge  of  the  books  of  the 
corporation  containing  the  names  of  the  stockholders  must 
allow  the  same  to  be  examined  by  any  stockholder  or  his 
attorney,  for  the  purpose  of  giving  such  notice. 

The  place  of  such  meeting  must  be  the  principal  office 
of  the  company,  or  in  case  it  has  no  such  office,  at  the 
place  in  the  city  where  its  principal  business  has  been 
transacted,  or  in  case  such  office  or  place  is  denied,  then  at 
some  other  place  to  be  designated  in  such  notice  in  the  city 
or  town  where  the  principal  office  of  such  company  is  or 
was  last  located.  At  such  meeting  the  stockholders  must 
elect  two  or  more  inspectors  of  election.  If  a  majority  of 
the  votes  cast  shall  be  for  one  ticket  for  directors  the  per- 
sons so  named  and  voted  for  as  directors  thereupon  become 
the  directors  until  the  next  annual  election  and  until 
others  are  elected  and  qualified  in  their  stead,  and  without 
reference  to  the  time  when  they  become  stockholders.  In 
the  absence  at  such  meeting  of  the  books  of  the  corpora- 
tion showing  who  were  stockholders,  each  stockholder  in 
order  to  be  entitled  to  vote  must  present  a  statement  in 
writing,  signed  and  verified  by  him  under  oath,  setting  forth 
the  number  of  shares  of  stock  standing  in  his  name  on  its 
books,  and  upon  which  he  is  entitled  to  vote,  and  which  is 
then  owned  by  him,  and  if  known  to  him,  he  shall  also  state 
the  whole  number  of  shares  of  stock  issued  by  the  corpo- 
ration at  the  time  when  the  election  ought  to  have  been 
held,  and  on  filing  such  affidavit  with  the  inspectors  he  will 
be  entitled  to  vote  on  such  stock. 

The  inspectors  must  return  and  file  such  verified  state- 


THE   RIGHTS   OF   STOCKHOLDERS.  205 

ments,  together  with  the  certificate  of  the  results  of  the 
election,  which  must  be  verified  by  them,  with  the  clerk  of 
the  county  in  which  such  election  is  held.1 

In  addition  to  electing  directors  the  stockholders  at  such 
a  meeting  may  adopt  a  by-law  providing  for  the  annual 
meetings  and  election  of  directors.  Such  by-laws  must  be 
adopted  in  the  same  manner  and  by  the  same  number  of 
votes  as  is  prescribed  for  the  election  of  directors,  and  has 
the  same  effect  as  if  it  had  been  adopted  by  the  directors 
of  the  company.2 

1  Laws  of  1S85,  chap.  489,  §3.  2  Id.  §  4. 


206  THE    LAW   OF   CORPORATIONS. 


CHAPTER   VII. 
THE    LIABILITIES  OF  STOCKHOLDERS. 

Where  the  capital  stock  of  a  corporation  has  not  been 
paid  in  full  and  the  amount  paid  is  insufficient  to  satisfy  the 
claims  of  its  creditors,  each  stockholder  is  liable  on  each 
share  held  by  him  to  the  extent  of  the  amount  necessary  to 
complete  such  share  as  fixed  by  the  charter  of  the  company, 
or  such  proportion  of  that  sum  as  may  be  required  to  satisfy 
the  debts  of  the  company.1 

In  addition  to  this  liability,  which  is  general  to  all  the 
corporations  organized  under  the  laws  of  this  state,  many  of 
the  acts  for  the  formation  of  corporations  impose  upon  their 
stockholders  certain  special  liabilities. 

Under  the  Manufacturing  Act All  the  stockholders  of  com- 
panies incorporated  under  this  act,  are  severally  individually 
liable  to  the  creditors  of  the  company  to  an  amount  equal 
to  the  amount  of  stock  held  by  them  respectively  for  all 
debts  and  contracts  made  by  such  company,  until  the  whole 
amount  of  capital  stock  fixed  and  limited  by  such  company 
has  been  paid  in  and  a  certificate  thereof  has  been  made 
and  recorded  in  the  office  of  the  clerk  of  the  county  where 
the  business  of  the  company  is  carried  on.2 

Stock  which  has  been  issued  for  property  purchased,  how- 
ever, is  not  liable  under  this  section.3 

Under  this  act,  also,  stockholders  are  jointly  and  severally 
individually  liable  for  all  debts  that  may  be  due  and  owing 
to  all  their  "  laborers,  servants  and  apprentices"  for  services 
performed  for  such  corporation.4 

1  Rev.   Stat.,   part    i.   chap,   xviii.  3  Laws  of  1S53,  chap.  333.  §  2. 
title  3,  §  5.                                                          4  Laws  of  1848,  chap.  40,  §  18. 

2  Laws  of  184S,  chap.  40,  §  10. 


THE   LIABILITIES    OF   STOCKHOLDERS.  20J 

No  person,  however,  holding  stock  in  any  such  company 
as  executor,  administrator,  guardian  or  trustee,  and  no  per- 
son holding  such  stock  as  collateral  security,  is  personally 
subject  to  any  liability  as  stockholder  of  such  company;  but 
the  person  pledging  such  stock  is  considered  as  holding  the 
same  and  is  liable  as  a  stockholder  accordingly,  and  the 
estates  and  funds  in  the  hands  of  such  executor,  administra- 
tor, guardian  or  trustee,  are  liable  in  like  manner  and  to  the 
same  extent  as  the  testator  or  intestate  or  the  ward  or  the 
person  interested  in  such  trust  fund  would  have  been  if  he 
had  been  living  and  competent  to  act  and  hold  the  same  stock 
in  his  own  name.1 

No  stockholder  is  personally  liable  for  the  payment  of 
any  debt  contracted  by  any  company  formed  under  this  act 
which  is  not  to  be  paid  within  one  year  from  the  time  the 
debt  is  contracted,  nor  unless  a  suit  for  the  collection  of  such 
debt  is  brought  against  the  company  within  one  year  after 
the  debt  becomes  due  ;  and  no  suit  may  be  brought  against 
any  stockholder  for  any  debt  of  such  company  unless  it  is 
commenced  within  two  years  from  the  time  he  may  have 
ceased  to  be  a  stockholder  ;  nor  until  an  execution  against 
the  company  has  been  returned  unsatisfied  in  whole  or  in 
part/ 

Under  the  Business  Act. — Under  this  act  the  corporations 
are,  as  we  have  seen,  of  two  classes,  namely  :  full  liability 
companies,  and  limited  liability  companies. 

In  full  liability  companies  all  the  stockholders  are  sever- 
ally individually  liable  to  the  creditors  of  the  company  for 
all  debts  and  liabilities  of  such  compauy,  and  may  be  joined 
as  defendants  in  any  action  against  the  company,  but  no 
execution  can  issue  against  any  stockholder  individually  until 
execution  has  been  issued  against  the  company  and  has  been 
returned  unsatisfied  ;  and  whenever  a  judgment  is  recovered 
against  a  stockholder  individually,  all  the  stockholders  must 

1  Laws  of  1S4S,  chap.  40,  §  16.  '■  Id.  §  24.     Handy  v.  Draper,  89 

N.  V.  334- 


208  THE    LAW    OF   CORPORATIONS. 

contribute  a  proportionate  share  of  the  amount  paid  by  such 
stockholder  on  such  judgment,  proportionate  to  the  number 
of  shares  of  stock  owned  by  each  of  them,  and  such  stock- 
holder will  have  a  right  of  action  against  the  other  stock- 
holders in  the  corporation  jointly  or  severally  to  recover 
from  them  the  proper  portion  due  by  them  of  the  amount  so 
paid.1 

In  limited  liability  companies  all  the  stockholders  are 
severally  individually  liable  to  the  creditors  of  the  company 
to  an  amount  equal  to  the  amount  of  stock  held  by  them 
for  all  debts  and  contracts  made  by  the  company,  until  the 
whole  amount  of  capital  stock  fixed  and  limited  by  such 
company  has  been  paid  in  and  a  certificate  thereof  made 
and  recorded. 

The  term  stockholder  as  here  used  applies  not  only  to 
such,  persons  as  appear  by  the  books  of  the  corporation  to 
be  such,  but  also  to  every  equitable  owner  of  stock,  although 
the  same  may  appear  on  such  books  in  the  name  of  another 
person,  and  also  to  every  person  who  may  have  advanced 
the  instalments  of  purchase  money  of  any  stock  in  the  name 
of  any  person  under  twenty-one  years  of  age,  and  while  such 
person  remains  a  minor  to  the  extent  of  such  advance  ;  and 
also,  to  every  guardian  or  other  trustee  who  has  voluntarily 
invested  any  trust  funds  in  such  stock ;  and  no  trust  funds 
in  the  hands  of  such  guardian  or  trustee  are  in  any  way  liable 
under  the  provisions  of  this  act  by  reason  of  such  invest- 
ment, nor  is  the  person  for  whose  benefit  any  such  invest- 
ment may  be  made  responsible  in  respect  to  this  stock  until 
thirty  days  after  the  time  when  he  became  competent  and 
able  to  control  and  dispose  of  the  same,  but  the  guardian  or 
other  trustee  making  such  investment  will  continue  respon- 
sible as  a  stockholder  until  such  responsibility  devolves  upon 
the  person  beneficially  interested.  In  respect  to  stock  held 
by  a  guardian  or  other  trustee  under  a  transfer  of  the  same  by 

1  Laws  of  1875,  chap.  611,  §  34. 


THE    LIABILITIES    OE   STOCKHOLDERS.  209 

a  third  person,  or  under  positive  directions  by  a  third  person 
for  such  investment,  the  person  making  such  transfer  or  giv- 
ing such  direction  will  be  deemed  a  stockholder  and  his 
estate  be  responsible  for  the  debts  and  liabilities  chargeable 
on  such  stock. 

No  execution  can  issue  against  any  stockholder  individu- 
ally until  execution  has  been  issued  against  the  corporation 
and  returned,  unsatisfied  ;  and  whenever  a  judgment  is  re- 
covered against  a  stockholder  all  the  stockholders  must  con- 
tribute a  proportionate  share  of  the  amount  paid  by  such 
stockholder  on  such  judgment,  proportionate  to  the  number 
of  shares  of  stock  owned  by  each  of  them  ;  and  such  stock- 
holder will  have  a  right  of  action  against  the  other  stock- 
holders jointly  or  severally  to  recover  from  them  the 
proportion  clue  by  them  and  each  of  them  of  the  amount 
so  paid.' 

The  act  contains  a  similar  provision  in  regard  to  trustees 
of  stock  as  is  contained  in  the  Manufacturing  Act.2 

No  stockholder  is  personally  liable  for  the  payment  of 
any  debt  contracted  by  any  corporation  formed  under  this 
act  which  is  not  to  be  paid  within  two  years  from  the  time 
the  debt  is  contracted,  nor  unless  an  action  for  the  collec- 
tion of  such  debt  be  brought  against  such  corporation  within 
two  years  after  the  debt  became  clue.  No  action  can  be 
brought  for  any  such  debt  against  any  stockholder  who  has 
ceased  to  be  a  stockholder  unless  it  be  commenced  within 
two  years  from  the  time  he  has  ceased  to  be  such  stock- 
holder.3 

It  is  not  necessary,  under  this  act,  that  a  judgment  be 
first  obtained  against  the  company  in  order  to  maintain  an 
action  against  a  stockholder.  An  action  maybe  commenced 
and  judgment  obtained  against  a  stockholder  at  any  time 
pending  an  action  against  the  company,  but  execution  cannot 


1  Laws  of  1875,  chap.  611,  §  37.  a  Id.  £25. 

a  Id.  §  23. 


2IO  THE   LAW   OF   CORPORATIONS. 

issue  on  such  judgment  until  execution  has  been  returned  un- 
satisfied against  the  company.  The  remedy  against  the 
stockholder  is  simply  suspended  until  that  is  done.1 

Insurance  Companies. — The  general  rule  may  probably 
safely  be  laid  down  that  stockholders  of  insurance  companies 
are  not  personally  liable  in  any  event  for  the  debts  of  the 
company  except  to  the  extent  of  the  instalments  due  and 
unpaid  upon  their  stock,  and  the  liability  to  the  forfeiture  of 
their  shares,  in  whole  or  in  part,  for  the  failure  to  make  good 
a  deficit  in  the  capital  when  the  same  is  impaired.2 

In  the  case  of  Chase  v.  Lord3  the  question  of  the  lia- 
bility of  stockholders  of  insurance  companies,  organized 
under  chapter  three  hundred  and  eight,  of  laws  of  1849,  un" 
til  the  whole  amout  of  the  capital  raised  by  the  company  is 
paid  in,  was  very  fully  discussed  by  the  court,  and  it  was 
held  that  such  liability  attached  only  to  the  corporators,  and 
that,  as  the  functions  of  the  corporators  ceased  with  the  or- 
ganization of  the  company,  they  could  not  thereafter  be 
held  liable. 

It  seems,  therefore,  that  the  only  remedy  given  to  a 
creditor  of  an  insurance  company  against  its  stockholders, 
individually,  where  the  whole  capital  has  not  been  paid  in, 
is  found  in  that  provision  of  the  revised  statutes,  in  relation 
to  corporations,  which  obligates  each  stockholder  to  pay 
on  each  share  of  his  stock  the  sum  necessary  to  make  it  full 
paid,  or  such  portion  thereof  as  is  required  to  pay  the  cor- 
porate debts,  and  that  the  liability  of  the  stockholder  is  lim- 
ited by  this  provision. 

Banks. — The  Banking  Act  provides  that  whenever  de- 
fault shall  be  made  in  the  payment  of  any  debt  or  liability 
contracted  by  any  corporation  or  joint  stock  association, 
for   banking  purposes,  issuing  bank   notes  or  any   kind  of 

1  Walton  v.  Coe,  no  N.  Y.  109.  Laws   of    1853,    chap.    463,  §    17  as 

2  Laws  of  1S49,  chap.  308,  §  13  as       amended  by  Laws  of  1879,  chap.  161, 
amended  by  Laws  of  1S64,  chap.  425.       §  2. 

Laws    of    1S53    chap.    466,    §    24.  377N.  Y.  1. 


THE    LIABILITIES    OF    STOCKHOLDERS.  211 

paper  credits  to  circulate  as  money,  the  stockholders  of  such 
corporation  or  association  shall  be  individually  responsible, 
equally  and  ratably,  for  the  amount  of  such  debt  or  liability 
with  interest  to  the  extent  of  their  respective  shares  of 
stock  in  any  such  corporation  or  association.' 

The  law  of  the  United  States  imposing  a  tax  of  ten  per 
cent,  on  the  circulation  of  state  banks  is  practically  pro- 
hibitory, and  there  are  no  banks  at  present  organized  under 
the  state  laws  which  issue  bank  notes  or  any  kind  of  paper 
credits  to  circulate  as  money. 

The  question  arose,  and  was  submitted  to  the  attorney 
general  by  the  Superintendent  of  the  Banking  Department, 
whether  in  view  of  such  prohibition,  the  stockholders  of 
state  banks  were  liable  as  provided  in  the  above  section,  or 
whether  the  liability  attached  only  upon  the  issue  of  circu- 
lating notes. 

In  an  opinion  filed  in  the  Banking  Department,  Septem- 
ber 3rd,  1884,  the  attorney  general  decided  that  the  stock- 
holders of  state  banks  not  issuing  bank  notes  or  paper 
credits  intended  to  circulate  as  money  are  not  liable  to  the 
creditors  of  those  institutions.2 

In  his  opinion  he  cites  the  unreported  case  of  Matter  of 
the  Merchants  Bank  of  Watertown,  in  which  the  same  view 
of  the  question  is  taken.  In  that  case,  although  the  amount 
involved  was  large,  no  appeal  was  taken  from  the  decision, 
and  while  a  Special  Term  case  it  may  undoubtedly  be  taken 
as  a  correct  statement  of  the  law. 

Safe  Deposit  Companies. — The  stockholders  of  any  corpo- 
ration, organized  under  the  provisions  of  the  act  authorizing 
the  formation  of  corporations  for  the  safe  keeping  and  guar- 
anteeing of  personal  property,  are  jointly  and  severally  liable 
for  all  debts  that  may  be  due  and  owing  by  such  corpora- 
tion to  an  amount  equal  to  the   par  value  of  their  stock  in 


1  Laws  of  1S82,  chap.  409,  §  125.         this  opinion  is  given  in  full. 

2  Paine's  Banking  Laws  182, where 


212  THE    LAW    OF   CORPORATIONS. 

such  corporation  over  and  above  such  stock,  to  be  recovered 
of  the  stockholders,  who  were  such  when  the  debt  was  con- 
tracted, or  loss  or  damage  sustained,  or  of  any  subsequent 
stockholder.  Any  stockholder  who  may  have  paid  any  de- 
mand against  such  company  either  voluntarily  or  by  com- 
pulsion may  resort  to  the  rest  of  the  stockholders  who  are 
liable  to  contribution. 

The  dissolution  of  such  a  corporation  does  not  release  or 
affect  the  liability  of  any  stockholder  which  may  have  been 
incurred  before  such  dissolution.1 

Trust  Companies. — Whenever  default  is  made  in  the  pay- 
ment of  any  debt  or  liability  contracted  by  any  trust  com- 
pany, organized  under  the  general  laws,  the  stockholders 
thereof  are  individually  responsible,  equally  and  ratably  for 
the  then  existing  debts  of  the  corporation  ;  but  no  stock- 
holder is  liable  for  such  debts  to  an  amount  exceeding  the 
par  value  of  the  stock  held  by  him  at  the  time  of  such  de- 
fault ;  and  no  person  holding  such  stock  as  an  executor, 
trustee,  etc.,  or  as  collateral  security  is  liable  as  a  stock- 
holder, and  the  estate  and  funds  in  his  hands  only  are 
liable.2 

Railroads. — Each  stockholder  of  any  company  formed 
under  the  act  to  authorize  the  formation  of  railroad  cor- 
porations, is  individually  liable  to  the  creditors  of  such  com- 
pany to  an  amount  equal  to  the  amount  unpaid  on  the  stock 
held  by  him  for  all  the  debts  and  liabilities  of  such  company, 
until  the  whole  amount  of  the  capital  stock  so  held  by  him 
shall  have  been  paid  to  the  company  ;  and  all  the  stock- 
holders are  jointly  and  severally  liable  for  all  debts  due  or 
owing  to  any  of  its  "  laborers  and  servants  other  than  con- 
tractors" for  personal  services  for  thirty  days'  service 
performed  for  such  company,  but  are  not  liable  to  an 
action  therefore  before  an  execution  has  been  returned  un- 


1  Laws  of  1875,  chap.  613,  §  9.  amended  by  Laws  of  1889,  chap.  558. 

*  Laws  of  1SS7,  chap.  546,  §  29,  as 


THE    LIABILITIES   OF   STOCKHOLDERS.  213 

satisfied  in  whole  or  in  part  against  the  corporation,  and  the 
amount  due  on  such  execution  is  the  amount  recoverable 
with  costs  against  the  stockholders. 

Before  such  laborer  or  servant  can  charge  a  stock- 
holder for  such  services,  he  must  give  him  notice  in  writing 
within  twenty  days  after  the  performance  of  the  services 
that  he  intends  to  hold  him  liable,  and  must  commence 
an  action  therefor  within  thirty  days  after  the  return  of 
the  execution  ;  and  every  stockholder  against  whom  any 
such  recovery  is  had  may  recover  the  same  of  the  other 
stockholders  in  such  corporation  in  ratable  proportion  to  the 
amount  of  stock  they  respectively  hold.1 

Bridge  Companies. — The  stockholders  of  bridge  companies 
are  liable  to  an  amount  equal  to  the  amount  of  capital 
stock  held  by  them  to  the  creditors  of  such  companies,  un- 
til the  whole  amount  of  the  capital  stock  is  paid  in  and  a 
certificate  of  such  payment  filed.'* 

Building  Companies. — -The  stockholders  of  companies  in- 
corporated for  the  purpose  of  erecting  buildings,  buying  and 
selling  lands,  using  elevators,  etc.,  are  jointly  and  severally 
liable  to  the  creditors  of  the  company  to  an  amount  equal 
to  the  amount  of  stock  held  by  them  respectively  for  all 
debts  of  the  company  until  the  whole  amount  of  the  capi- 
tal is  paid  in  and  the  certificate  thereof  recorded  3;  and  they 
are  also  jointly  and  severally  liable  for  the  debts  that  may 
be  due  and  owing  to  all  their  "laborers,  servants  and 
apprentices  "  for  services  performed  for  such  corporation.4 

No  stockholder  is  liable  for  the  payment  of  any  debt 
which  is  not  to  be  paid  within  one  year  from  the  time  the  debt 
was  contracted,  nor  unless  a  suit  for  its  collection  is  brought 
against  the  company  within  one  year  after  the  debt  becomes 
due  ;  nor  can  a  suit  be  brought  against  a  stockholder  until  an 
execution  against  the  company  has  been  returned   unsatis- 

1  Laws  of  1S50,  chap.  140,  §  10.  as  :i  Laws  of   1S53,  chap.  117,  §  10. 

amended  by  Laws  of  1S54,  chap.  282.  4  Id.  §  iS. 

';  Laws  of  1S4S,  chap.  259,   i  2. 


214  THE    LAW    OF   CORPORATIONS. 

fied,  nor  unless  the  suit  is  commenced  within  three  months 
from  the  return  of  such  execution.' 

Gas-Light  Companies. — The  stockholders  of  gas-light 
companies  are  individually  liable  to  the  creditors  of  such 
companies  to  an  amount  equal  to  the  amount  of  stock  held 
by  them  for  all  debts  of  the  company  until  the  whole 
amount  of  capital  stock  has  been  paid  in  and  a  certificate 
recorded2 ;  and  they  are  also  jointly  and  severally  individu 
ally  liable  for  all  debts  that  may  be  due  and  owing  to  all 
their  "laborers,  servants  and  apprentices"  for  services  per- 
formed for  such  corporation.3 

No  stockholder  is  personally  liable  for  the  payment  of 
any  such  debt  of  the  company  which  is  not  to  be  paid 
within  one  year  from  the  time  the  debt  is  contracted,  nor 
unless  a  suit  for  its  collection  is  brought  against  the  com- 
pany within  one  year  after  the  debt  becomes  due  ;  and  no 
suit  can  be  brought  against  a  stockholder  unless  it  is  com- 
menced within  two  years  from  the  time  he  has  ceased  to  be 
a  stockholder  in  such  company,  nor  until  an  execution 
against  the  company  has  been  returned  unsatisfied.4 

Guano  Companies. — -The  stockholders  of  companies  incor- 
porated for  the  purpose  of  mining  guano  are  liable  to  the 
creditors  of  the  company  to  an  amount  equal  to  the  stock 
subscribed  by  them  until  the  whole  amount  of  the  capital 
has  been  paid  in" ;  and  they  are  jointly  and  severally  indi- 
vidually liable  for  all  debts  that  may  be  due  and  owing  to 
all  their  "  laborers,  servants  and  apprentices  "  for  services 
performed  for  such  corporation.6 

No  stockholder  is  personally  liable  for  the  payment  of 
any  debt  if  he  has  ceased  to  be  a  stockholder  in  such  com- 
pany, unless  a  suit  for  the  same  has  been  commenced  within 
two  years  from  the  time  he  has  ceased  to  be  a  stockholder, 

1  Laws  of  1853,  chap.  117,  §  24.  4  Id.  §  17. 

2  Laws  of  1848,  chap.  37,  §  10.  5  Laws  of  1S57,  chap.  546,  §  II. 

3  Id.  §15.  6Id.  §i3. 


THE   LIABILITIES   OF   STOCKHOLDERS.  21$ 

nor  until  an  execution  against  the  company  has  been 
returned  unsatisfied.1 

Hotel  Companies. — Stockholders  of  hotel  companies  are 
■jointly,  severally  and  individual!)-  liable  to  the  creditors  of, 
or  those  holding  claims  against  such  company  to  an  amount 
equal  to  the  amount  of  stock  held  by  them,  for  all  the 
debts  and  liabilities  of  the  company  ;  but  such  stockholder  is 
not  liable  to  an  action  therefor  before  an  execution  has  been 
returned  unsatisfied  against  the  company,  and  then  the 
amount  due  on  such  execution  is  the  amount  recoverable 
with  costs  against  the  stockholder." 

Persons  holding  stock  as  executor  or  trustee  or  pledgee 
are  not  personally  liable  but  only  to  the  extent  of  the  estate 
in  their  hands.3 

Navigation  Companies. — The  stockholders  of  navigation 
companies  are  severally,  individually  liable  to  the  creditors 
of  such  companies  to  an  amount  equal  to  the  amount  of 
stock  held  by  them  until  the  whole  amount  of  capital  stock 
has  been  paid  in  and  the  certificate  recorded4 ;  and  they  are 
jointly  and  severally  individually  liable  for  all  the  debts  that 
may  be  due  and  owing  to  all  their  "laborers  and  operatives  " 
for  services  performed  for  such  corporation.6 

No  stockholder  is  personally  liable  for  the  payment  of 
any  debt  contracted  by  such  corporation  unless  a  suit  for 
its  collection  is  brought  against  the  corporation  within  six 
years  after  the  debt  becomes  due,  nor  until  an  execution 
has  been  returned  unsatisfied  against  the  company/' 

The  term  stockholder  as  used  in  this  act  applies  not 
only  to  such  persons  as  appear  on  the  books  of  the  corpora- 
tion to  be  such,  but  also  to  every  equitable  owner  of  stock 
although  the  same  may  appear  on  such  books  in  the  name 
of  another  person  ;  and  also  to  every  person  who  has  ad- 
vanced the  instalments  for  purchase  money  of   any  stock  in 

1  Laws  of  1S57,  chap.  546,  ^  20.  *  Laws  of  1S52,  chap.  22S,  £  6. 

2  Laws  of  1874,  chap.  143,  §  13.  5  Id.  i  5. 

3  Id.  §  10.  6  Id.  §3. 


2l6  THE    LAW    OF   CORPORATIONS. 

the  name  of  any  person  under  twenty-one  years  of  age  and 
while  such  person  remains  a  minor  to  the  extent  of  such 
advance  ;  and  also  to  every  guardian  or  other  trustee  who 
has  voluntarily  invested  any  trust  funds  in  such  stock  ;  and 
no  trust  funds  in  the  hands  of  such  guardian  or  trustee  are 
in  any  way  liable  by  reason  of  such  investment ;  nor  is  the 
person  for  whose  benefit  any  such  investment  is  made  re- 
sponsible in  respect  to  such  stock  until  thirty  days  after  the 
time  when  he  shall  become  competent  and  able  to  control  and 
dispose  of  the  same  ;  but  the  guardian  or  other  trustee  mak- 
ing such  investment  continues  responsible  as  a  stockholder 
until  such  responsibility  devolves  upon  the  person  benefi- 
cially interested  ;  and  in  respect  to  stock  held  by  a  guar- 
dian or  other  trustee  under  a  transfer  by  a  third  person  or 
under  directions  by  a  third  person  -for  such  investment, 
the  person  making  such  transfer  or  giving  such  directions 
is  deemed  a  stockholder  and  his  estate,  if  he  be  deceased,  is 
responsible  for  all  debts  and  liabilities  chargeable  on  such 
stock.1 

Inland  Navigation  Companies. — The  stockholders  of  in- 
land navigation  companies  are  jointly  and  severally  liable 
to  the  creditors  of  such  companies  to  an  amount  equal  to 
the  amount  of  stock  held  by  them  respectively  for  all  debts 
and  contracts  made  by  these  companies,  and  for  all  claims 
and  demands  against  them  until  the  whole  amount  of  cap- 
ital stock  is  paid  in  and  a  certificate  thereof  made  and 
recorded.2  They  are  also  jointly  and  severally  individually 
liable  for  all  debts  that  may  be  due  and  owing  to  all  "  labor- 
ers and  servants"  of  such  company  for  services  performed  ; 
but  no  action  can  be  brought  for  any  such  debt  until  it  has 
been  due  and  unpaid  thirty  days.3 

No  stockholder  is  in  any  case  personally  liable  for  the 
payment  of  any  debt  contracted  by,  or  claim  or  demand 
against,  such  company  unless  an   action  for  its  collection  is 

1  Laws  of  1S52,  chap.  228,  §  q.  s  Id.  §  iS. 

■  Laws  of  1S54,  chap.  232,  §  10. 


THE    LIABILITIES    OF   STOCKHOLDERS.  2\J 

brought  against  the  company  within  one  year  aftei  it  has 
become  due,  nor  until  an  execution  against  the  property  of 

the  company  has  been  returned  unsatisfied.' 

The  act  also  contains  a  provision  that  no  person  holding 
stock  as  executor,  administrator  or  trustee  shall  be  person 
ally  subject  to  any  liability  as  stockholder.2 

Park  Associations. — The  stockholders  of  park  associations 
are  individually  liable  to  an  amount  equal  to  the  amount  of 
the  capital  stock  held  by  them  for  all  debts  contracted  by 
the  directors  or  agents  of  such  companies  until  the  whole 
amount  of  capital  stock  is  paid  in  and  a  certificate  of  pay- 
ment recorded.3 

Pipe-Line  Companies. — Stockholders  of  pipe-line  com 
panies  are  individually  liable  to  the  creditors  of  such  com- 
panies to  an  amount  equal  to  the  amount  unpaid  on  the 
stock  held  by  them  until  the  whole  amount  of  the  capital 
stock  has  been  paid  in  ;  and  the)'  are  jointly  and  severally 
liable  for  debts  due  or  owing  to  any  of  the  "  laborers  and  ser- 
vants, other  than  contractors,"  for  personal  services  for 
thirty  days'  services  performed  for  such  company ;  but  are 
not  liable  to  an  action  therefor  before  an  execution  has  been 
returned  unsatisfied  against  the  company,  and  the  amount 
due  on  such  execution  is  the  amount  that  ma}-  be  recovered 
with  costs  against  such  stockholder  by  such  laborer  or  ser- 
vant.4 

No  person  holding  stock  as  executor  or  administrator  or 
trustee  is  personally  liable  as  such  stockholder/ 

Stage-CoacJi  Companies. — The  stockholders  of  stage-coach 
companies  are  jointly  and  severally  individually  liable  to  the 
creditors  of  such  companies  for  all  the  debts  and  liabilities, 
but  are  not  liable  to  an  action  therefor  before  an  execution 
is  returned  unsatisfied  against  the  corporation,  and  then  the 

1  Laws  of  1S54,  chap.  232,  §  12.  Laws  of  1S72.  chap.  24S,  £  3. 

5  Id.  §  16.  4  Laws  of  1S7S,  chap.  203,  £  11. 

3  Laws  of  1861,  chap.  149.  £  2,  and  5  Id.  J;  12. 


2l8  THE    LAW   OF   CORPORATIONS. 

amount  clue  on  such  execution  is  the  amount  recoverable 
with  costs  against  such  stockholders.1 

No  person  holding  stock  as  executor,  administrator, 
trustee  or  pledgee  is  personally  subject  to  any  liability  as  a 
stockholder  of  such  company.2 

Telegraph  Companies. — The  act  for  the  incorporation  of 
telegraph  companies  provides  that  the  stockholders  shall  be 
jointly  and  severally  personally  liable  for  the  payment  of  all 
debts  and  demands  against  such  association  which  shall  be 
contracted,  or  which  shall  become  due,  during  the  time  of 
their  holding  such  stock,  but  such  liability  shall  not  exceed 
twenty-five  per  cent,  in  amount  the  amount  of  stock  held  by 
him  ;  and  it  further  provides  that  such  stockholder  shall  not 
be  proceeded  against  until  judgment  and  execution  unsatis- 
fied had  been  returned  against  the  company,  unless  such 
association  had  been  dissolved.3 

By  an  amendment  to  this  act,  however,  it  is  provided  that 
the  liability  of  any  stockholder  shall  apply  only  to  the  amount 
due  and  unpaid  on  his  stock.4  Thus  the  liability  of  stock- 
holders of  telegraph  companies  is  now  limited  to  the  general 
liability  of  the  amount  due  and  unpaid  on  such  stockholder's 
subscriptions. 

Turnpike  Companies. — The  stockholders  of  turnpike  and 
plank-road  companies  are  liable,  in  their  individual  capacity, 
for  the  payment  of  the  debts  of  such  companies  to  an  amount 
equal  to  the  amount  of  stock  they  severally  have  subscribed 
for  or  hold  over  and  above  such  stock  to  be  recovered  of  the 
stockholder  who  is  such  when  the  debt  was  contracted,  or  of 
any  subsequent  stockholder.  Any  stockholder  who  has  paid 
any  demand  against  such  company,  either  voluntarily  or  by 
compulsion,  has  a  right  to  resort  to  the  rest  of  the  stock- 
holders who  are  liable  to  contribution.  The  dissolution  of 
any  such  company  does  not  release  or  affect  the  liability  of 


1  Laws  of  1867,  chap.  974.  §  10.  3  Laws  of  184s,  chap.  265,  §  10. 

2  Id.  §  11.  4  Laws  of  1S53,  chap.  471,  §  4. 


t 

THE   LIABILITIES   OF   STOCKHOLDERS.  219 

any  stockholder  which  may  have  been  incurred  before  such 
dissolution.1 

The  law  provides  a  summary  method  of  enforcing  the 
individual  liability  of  stockholders  in  such  companies  after 
an  execution  against  the  property  of  such  corporation  has 
been  returned  unsatisfied.  An  action  may  be  brought  by 
any  creditor  on  behalf  of  himself  and  of  other  creditors  of 
such  corporation  against  all  the  stockholders  and  any  former 
stockholder  for  the  purpose  of  enforcing  their  respective  in- 
dividual liabilities. 

■In  such  an  action  the  court  may  enforce  the  payment  of 
all  arrears  due  from,  and  owing  by,  any  stockholder,  and  also 
ascertain  all  the  debts  of  the  corporation  which  the  stock- 
holders are  individually  liable  to  pay,  and  assess  and  appor- 
tion the  total  amount  of  such  indebtedness,  and  may  apply 
the  same  to  the  payment  and  extinguishment  of  the  debts 
of  the  corporation  which  may  be  established  and  proved  in 
such  action  to  be  debts  for  which  the  stockholders  are  liable 
individually.2 

Liability  on  Unpaid  Stock. — The  capital  stock  of  a  corpora- 
tion is,  as  we  have  seen,  the  fund  available  to  creditors  in 
case  of  insolvency,  and  all  stockholders  are  liable  on  each 
share  to  the  amount  necessary  to  complete  such  share  as 
fixed  by  charter  of  the  company. 

In  order  to  incur  the  liability  one  must  be  a  subscriber 
to  the  stock  or  a  stockholder  in  the  company.  It  is  not, 
however,  necessary  in  order  to  make  one  liable  as  a  stock- 
holder, that  he  actually  have  a  certificate  of  stock  issued  in 
his  name.  If  he  has  acted  as  a  stockholder  or  as  an  officer 
of  the  company  in  such  a  manner  as  to  hold  himself  out  to 
those  dealing  with  the  company  as  a  stockholder,  it  is  suf- 
ficient to  make  him  liable,  even  though  he  has  never  paid 
any  instalment  on  the  stock,  nor  has  had  a  certificate  issued 

1   Laws  of  1847,  chap.  210,  §  44.  "  Laws  of  1S55,  chap.  390. 


220  THE    LAW    OF    CORPORATIONS. 

to  him.1  So,  too,  one  to  whom  stock  has  been  apportioned 
is  a  stockholder  although  no  certificate  has  been  issued  and 
the  apportionment  was  made  for  him  to  an  agent  who  sub- 
scribed at  his  request.2 

A  creditor  bringing  an  action  for  unpaid  subscriptions 
has  a  double  remedy.  He  may  maintain  an  action  after 
exhausting  his  remedy  against  the  corporation  to  reach  the 
liability  of  any  stockholder,  and  be  subrogated  to  the  rights 
of  the  company  without  joining  other  stockholders  or  credi- 
tors ;  or  he  may,  after  the  return  of  an  execution  unsatisfied 
against  the  company,  maintain  an  action  in  the  nature  of  a 
creditor's  bill  on  behalf  of  himself  and  other  creditors  who 
may  choose  to  come  in  and  make  all  the  stockholders  parties 
to  the  action.3 

The  right  to  collect  the  subscriptions  is  a  right  belonging 
to  the  company,  and  where  an  action  has  been  commenced 
prior  to  the  appointment  of  a  receiver  it  may  be  continued 
for  the  benefit  of  the  receiver.4 

It  is  not  necessary  that  shares  be  allotted  to  the  sub- 
scriber before  bringing  an  action  upon  the  subscription  ; 5  and 
where  subscribers  sign  a  paper  stating  that  they  thereby 
associate  themselves  together  to  form  a  corporation  for  the 
purposes  therein  stated,  a  promise  to  take  and  pay  for  shares 
set  opposite  their  respective  names  is  implied,  and  becomes 
binding  upon  such  subscribers  although  no  cash  payment  is 
made.6 

As  a  general  rule,  a  legal  and  effectual  formation  of  a 
corporation  is  a  condition  precedent  to  the  obligation  of  a 
subscriber,7  although  such   organization   may  be   waived  on 

1  Eaton  v.  Aspinwall,  19  N.  Y.  119;  Tracy  v.  First  Natl.  Bank  of  Selma, 

Burr  v.Wilcox,  22   id.  551;  Buffalo,  37  id.  523;  Phoenix  Warehousing  Co. 

etc.,  R.    R.    Co.    v.    Cary,    26    id.    75;  v.  Badger,  67  id.  294. 

Wheeler  v.  Millar,  90  id.  353.  b  Buffalo,  etc.,  R.  R.  Co.  v.  Dudley, 

-  Burr  v.   Wilcox.  22  N.  Y.  551.  14  X.  Y.  336. 

3  Bart  let  I  v.  Drew,  57   N.  Y.   587;  6  Lake  Ontario,  etc.,   R.  R.   Co.   v. 
Wheeler  v.  Millar,  90  id.  353.  Mason,  16  N.  Y.  451. 

4  Rankine  v.  Elliott,  16  N.  Y.  377;  1  Dorris  v.  Sweeney,  60  N.  Y.  463. 


THE    LIABILITIES    OF    STOCKHOLDERS.  221 

the  part  of  the  subscriber  by  dealing  with  the  company  as  a 
regularly  organized  corporation.1  And  while  a  change  in  the 
charter  of  a  company,  or  the  act  under  which  it  organized, 
will  not  as  a  general  rule  release  the  subscriber,"  yet  if  there 
is  a  change  in  the  objects  for  which  it  is  organized  and  a 
material  departure  from  the  original  purpose,  the  subscriber 
is  not  bound.3 

Where  a  stockholder  whose  stock  has  not  been  fully  paid 
in  in  good  faith  makes  an  absolute  and  valid  transfer  of  his 
stock  to  another,  he  is  not  liable  for  debts  made  after  such 
transfer.4 

That  a  mortgage  of  the  property  of  a  corporation  is  fore- 
closed, and  its  property  and  franchises  sold,  is  no  defence  to 
an  action  brought  to  recover  instalments  due  on  the  stock  ; ; 
nor  is  the  power  of  the  company  to  cause  the  shares  to  be  for- 
feited for  non-payment  of  instalments,  as  this  is  simply  a 
cumulative  remedy,  given  to  the  corporation.6  But  when 
shares  have  been  actually  forfeited  for  non-payment  of  sub- 
scription the  subscriber  ceases  to  be  a  stockholder,  and  is 
no  longer  liable  either  to  the  company  or  to  its  creditors  for 
unpaid  instalments.' 

Where  the  articles  of  incorporation  provide  that  at  the 
time  of  subscribing  every  subscriber  shall  pay  ten  per  cent, 
on  the  amount  subscribed  by  him,  and  that  no  subscription 
shall  be  received  or  taken  without  such  payment,  the  pay- 
ment is  a  condition  precedent  to  the  obligation  ;8  and  in  an 
action  by  the  corporation    against   a  subscriber   to  recover 

1  Buffalo  &  Allegany  R.  R.  Co.  v.  4  Billings   v.    Robinson,    94    X.   V. 
Cary,  26  N.  Y.  75;  Sodus  Bay.  etc.,  R.      415. 

R.  Co.  v.  Hamlin.  24  Hun,  390.  5  Buffalo  d"°  yameslown  R.   R.   Co. 

2  Schenectady  &>  S.   PI.   R.    Co.   v.      v.  Gifford,  S~  N.  Y.  294. 
Thatcher,  11  N.  Y.  102;  Buffalo,  etc.,  ''•  Mann  v.  Currie,  2  Barb.  294. 

R.  R.  Co.  v.  Dudley,  14  id.  336;   Mat-  7  Small  v.    Herkimer    Mfg.    Co.,  2 

ter  of  Lee  &  Co.'s    Bank,   21   id.   9;  N.  Y.  330;   Mills  v.    Stewart,    41  id. 

Union  Hotel  Co.  v.  Hersee,  79  id.  454.  3S4;    Wheeler  v.  Millar,  90  id.  353. 

3  Dorris  v.  Sweeney,  60  N.  Y.  463.  8  Perry  v.  Hoadly,  19  Abb.  N.C.  76. 


222  THE   LAW   OF   CORPORATIONS. 

the  amount  subscribed,  the  latter  is  not  estopped  from  de- 
nying such  payment  because  of  a  statement  in  the  subscrip- 
tion paper  that  the  amount  has  been  paid,  and  such  sub- 
scriber incurs  no  liability  on  his  subscription.  If,  however, 
such  subscriber  subsequently  pays  the  ten  per  cent,  re- 
quired by  the  act,  the  statute  requirement  becomes  fully 
complied  with  and  the  subscription  is  thereby  made  valid.' 

Liability  until  Capital  is  Paid  in. — Many  of  the  acts, 
as  we  have  seen,  contain  a  provision  that  all  stockholders 
shall  be  liable  to  the  creditors  of  the  company  to  an  amount 
equal  to  the  amount  of  stock  held  by  them  respectively  for 
all  the  obligations  of  the  company  until  the  whole  amount 
of  capital  stock  shall  have  been  paid  in. 

Under  this  provision  each  stockholder  is  liable  to  an 
amount  equal  to  the  stock  owned  by  him  individually,  in 
addition  to  his  liability  to  pay  in  full  for  the  stock  sub- 
scribed for,  or  bought  by  him,  until  each  and  every  other, 
stockholder  has  paid  for  his  stock  in  full,  and  a  certificate  of 
such  payment  has  been  made  and  recorded  as  required  in 
the  act  of  incorporation.2 

The  liability  is  in  the  nature  of  a  liability  as  co-partner 
with  the  corporation,3  and  continues  notwithstanding  the 
abandonment  or  dissolution  of  the  corporation  4  or  the  death 
of  the  stockholder,  and  an  action  against  the  stockholder 
may  be  revived  against  his  personal  representatives.5  It 
does  not  partake  at  all  of  the  nature  of  an  action  to  recover 
a  penalty,  and  there  is  no  connection  between  it  and  the  lia- 
bility of  a  trustee  for  failure  to  file  a  report,  or  for  filing  a 
false  report.  The  two  causes  of  action  have  no  affinity  and 
cannot  be  joined."  It  follows  that  an  action  brought 
against  one  as  a  trustee  for  the  recovery  of  penalty  exacted 

1  Black   River,    etc.,    R.   R.    Co.  v.  47;    Wiles  v.  Suydam,  64  id.  173. 

Clarke,  25  N.  Y.  20S;  Beach  v.  Smith,  *  Kincaid' v.   Dzvinclle,    59    N.   Y. 

30  id.  116;  N.  Y.  &  Oswego  Mid.  R.  548. 

R.  Co.  v.    Van  Horn,  57  id.  473.  5  Cochran    v.     Weichers,    Court  of 

■  Pfohlw.  Simpson,  74  N.   Y.    137.  Appeals,  23  No.  East.  Rep.  803. 

3  Coming  v.  McCullough,   1  N.   Y.  6  Wiles  v.  Suydam,  64  N.    Y.    173- 


THE   LIABILITIES   OF   STOCKHOLDERS.  223 

for  the  failure  to  file  a  report  or  for  filing  a  false  report  is 
no  bar  to  an  action  to  charge  the  same  person  on  his  liabili- 
ty as  a  stockholder  under  this  section.' 

Where  the  statute  provides  certain  conditions  prece- 
dent to  enforcing  the  liability  of  the  stockholders,  such  as  a 
provision  that  the  debt  must  be  one  payable  within  a  year 
from  the  time  it  was  contracted;  that  suit  against  the 
company  must  have  been  brought  within  a  time  specified  ; 
that  an  execution  against  the  company  must  have  been  re- 
turned unsatisfied  ;  they  must  all  be  performed,  unless  such 
performance  is  rendered  useless  or  impossible  by  the  disso- 
lution or  insolvency  of  the  company,  before  an  action  can 
be  maintained  against  a  stockholder.2  The  cause  of  action 
then  accrues,  and  the  statute  of  limitations  begins  to  run 
against  a  stockholder  from  that  time.3 

The  provision  is  not  for  the  benefit  of  all  creditors.  It 
applies  only  to  those  who  bring  themselves  within  its  terms, 
and  is  for  their  benefit  alone.4  It  is  an  individual  liability 
of  stockholders  directly  to  such  of  the  creditors  as  have 
complied  with  the  requisite  conditions  precedent,  and  it 
follows  that  it  is  not  a  liability  in  favor  of  the  corporation 
itself,  or  for  the  benefit  of  all  its  creditors,  and  unlike  the 
liability  on  unpaid  instalments,  it  cannot  therefore  be 
vested  in,  or  enforced  by,  a  receiver  of  the  corporation.' 

The  right  of  a  creditor  to  enforce  such  a  liability  is  a 
several  and  a  distinct  right,  and  not  a  joint  right  of  the  cred- 
itors generally,  and  he  may  therefore  sue  alone  to  enforce 
it,  although  there  are  other  creditors  similarly  situated  ;  and 
he  may  bring  this  action  against  one  stockholder  or  all.6 

On  the  other  hand  in  a  proper  case,  and  to  prevent  a 
multiplicity  of  actions,  a  court  of   equity  will   restrain  sepa- 

1  Douglass  v.  Ireland,  '73  N.  Y.  100.  *  Cuykendall  v .  Corning,  SS  N.  Y. 

2  Shellingtonv.  Hoivland,  53  N.  Y.  129, 

371;    Kincaid    v.    Dwindle,    59    id.  5  Farns-worth   v.    Wood,   91    N,    Y. 

548;  Handy  v.  Draper,  89  id.  334.  308. 

2  Knox  v.  Baldwin,  So  N.  Y.  610;  6  Weeks   v.    Love,    50    N.    Y.    568; 

Handy  v.  Draper,  89  id.  334.  Mathez  v.  Xeidig,  72  id.  100. 


224  THE    LAW    OF    CORPORATIONS. 

rate  and  individual  actions  at  law,  in  the  same  or  other  courts, 
where  there  are  many  such  actions  pending  against  stock- 
holders, and  bring  all  the  litigation  into  one  suit.1 

Where  the  property  of  a  corporation  has  been  divided 
among  its  stockholders  before  all  its  debts  have  been  paid, 
a  judgment  creditor,  after  the  return  of  an  execution  un- 
satisfied, may  maintain  an  action  against  any  individual 
stockholder  to  reach  any  funds  of  the  corporation  that  have 
been  received  by  him,  and  it  is  immaterial  whether  he  re- 
ceive them  by  fair  agreement  with  his  associates  or  by 
wrongful  act.  Such  a  creditor  is  not  obliged  to  bring  an  ac- 
tion against  all  the  stockholders  to  enforce  their  liability,  but 
may  pursue  the  remedy  against  any  one  who  has  property 
of  the  corporation  which  ought  to  be  applied  in  payment  of 
its  debts.'2 

A  statute  which  imposes  upon  the  stockholders  of  a  cor- 
poration  a  personal  liability  for  the  corporate  debts  is  in  dero- 
gation of  the  common  law,  and  will  be  construed  strictly  and 
not  extended  beyond  its  literal  terms.3  It  follows  that  all 
the  facts  necessary  to  establish  a  creditor's  cause  of  action 
must  be  alleged  and  proved.  It  must  be  shown  that  the 
stockholder  holds  an  amount  of  stock  in  the  company  equal 
to  the  amount  of  the  debt;  and  that  the  debt  was  one  ex- 
isting while  the  defendant  was  a  stockholder,  as  well  as  the 
other  necessary  facts  in  regard  to  an  action  against  a  cor- 
poration and  a  return  of  an  execution  unsatisfied.4 

While  all  of  the  above  allegations  are  essential  as  proof 
of   the   performance    of   the   conditions    precedent    without 

1  Pfold  v.  Simpson,  74  N.   Y.    137.  thus  transferred  is  still  liable  to  be 

'2  Bartlett  v.  Drew,  57   N.   Y.    5S7;  taken  on  execution   as  the   property 

Hastings  v.    Drew,    76    id.    9.      And  of  the  former  corporation.     Booth  v. 

where  the  managing  members  of  an  Bunce,  33  N.  Y.  139. 

embarrassed    corporation     unite     in  :i  Lowry  v.  Lnman,  46    N.    Y.    119; 

forming  a  new   one,  and   transfer  to  Chase  v.  Lord,  jj  id.  1. 

it  the  property  of  the  former  for  the  4  Chambers  v.  Lewis,  2S  N.  Y.  454; 

purpose  of   hindering,  delaying  and  Wheeler  v.  Millar,  90  N.  Y.  353. 

defrauding  its  creditors,  the  property 


THE   LIABILITIES   OF   STOCKHOLDERS.  225 

which  a  judgment  against  a  stockholder,  enforcing  his  per- 
sonal liability,  cannot  be  recovered,  such  proofs  are  available 
only  for  this  purpose,  and  the  cause  of  action  must  be  proved 
anew  against  the  stockholder.'  Where,  however,  a  creditor 
of  a  corporation  claims  directly  through  the  corporation  for 
a  liability  of  the  stockholder  to  the  corporation  for  unpaid 
instalments  of  his  stock,  it  has  been  held  that  the  record  of 
a  judgment  against  the  corporation  was  competent  evidence 
of  plaintiff's  status  as  a  creditor,  and  of  the  amount  due,  and 
that  such  evidence  was  binding  and  conclusive  against  the 
stockholder.2 

Where  the  requirements  as  to  the  payment  of  stock  have 
been  fully  complied  with,  a  stockholder's  liability  is  ended 
so  far  as  the  amount  of  stock  thus  fixed  and  limited  is  con- 
cerned ;  but  in  case  of  an  increase  of  the  capital,  the  liability 
again  attaches  to  the  extent  of  such  increase,  and  stock- 
holders purchasing  or  owning  the  new  stock  are  liable  to  the 
extent  of  the  stock  so  held  until  the  statute  is  complied 
with.3  As  the  words  "fixed  and  limited"  are  not  confined 
to  the  original  amount  of  stock  but  extend  to  any  increase, 
although  the  question  has  not  been  directly  adjudicated 
upon  in  the  Court  of  Appeals,  it  is  probable  that  the  same 
reasoning  would  apply  to  a  reduction  of  the  capital  stock, 
and  that  when  such  reduction  had  been  made,  and  the  cap- 
ital as  thus  "fixed  and  limited  "  had  been  paid  in,  and  a  cer- 
tificate filed,  the  liability  of  a  stockholder  would  thus  be 
terminated.4 

In  a  recovery  against  a  stockholder  interest  will  usually  be 
allowed  only  from  the  time  of  the  commencement  of  the  suit 

1  Miller  v.    White,  50   N.  Y.    137;  Stephens  v.  Fox,  S3  id.  313. 

McMahon  v.  Macy,  5;  id.    155:   Kin-  ■'■  Veeder  v.  Mudgett,  95  N.  Y.  295. 

caid  v.  Dwinelle,  59  id.  54s-    Wheeler  *  Randall v.  Havemeyer,  49  Super., 

v.   Millar,   24   Hun,    541.     Aff'd.   90  (J..&S.)52o;   Sutherland V.  Olcott,  95 

N.  Y.  353-  N.  Y   93. 

-  Hastings   v.   Drew,   76  N.   Y.   9; 


226  THE   LAW   OF   CORPORATIONS. 

against  him  ;  '  but  where  the  entire  principal  and  interest  of 
the  debt  does  not  exceed  the  limit  of  the  liability  of  a  stock- 
holder, interest  may  be  allowed  from  the  time  the  debt  be- 
came due  from  the  corporation.2 

Where  a  stockholder  has  been  held  liable  under  this  pro- 
vision and  has  paid  a  debt  of  the  corporation  he  can  enforce 
contribution  from  the  other  stockholders.  It  is  held  that 
the  liability  is  the  same  in  effect  as  if  every  stockholder  had 
executed  a  separate  bond  binding  himself  to  pay  the  debts 
upon  the  conditions  specified  in  the  act.  In  such  a  case 
equity  compels  contribution.3 

A  Stockholder's  Defences. — That  a  stockholder  is  himself 
a  creditor  of  the  company  is  generally  a  good  defence  to  the 
extent  of  the  indebtedness  of  the  corporation  to  him  ;4  but, 
as  is  said  in  Wheeler  v.  Millar,"  the  stockholder  must  really 
be  a  creditor  of  the  company ;  he  must  stand  in  a  rela- 
tion to  it  which  in  equity  and  justice  is  as  strong  as  that  of 
the  assailant.  If  he  himself  is  indebted  to  the  company  for 
unpaid  instalments  on  his  stock,  he  must  first  pay  his  in- 
debtedness, and  if  the  company  still  owe  him,  to  the  extent 
of  that  balance  he  would  have  an  equitable  defence. 

To  an  action  at  law  it  might  be  a  good  defence  on  the 
part  of  a  stockholder  that  the  plaintiff  was  also  a  stockholder, 
on  the  ground  that  the  separate  liabilities  of  stockholders 
could  not  be  adjusted  in  such  an  action.  But  if  the  stock- 
holder as  a  creditor  of  the  company  is  precluded  from  bring- 
ing such  an  action  against  a  fellow-stockholder,  it  is 
probable  that  he  would  be  entitled  to  the  remedy  of  con- 
tribution in  an  action  properly  brought  for  that  purpose.6 

1  Burr  v.  Wilcox,  22  N.  Y.  551;  Millar,  go  id.  353.  Where,  however, 
Shellington  v.  Howland,  53  id.  371;-  the  stockholders  are  made  liable  in 
Handy  v.  Draper,  S9  id.  334.  any  event  for  all  the  debts  of  the  cor- 

2  Wheeler  v.  Millar,  90  id.  353.  poration,  it  is   obvious   that  such  a 

3  Aspinwall  v.  Sacc/ii,  57  N.  Y.  defence  is  not  available.  See  Matter 
331.  of  E»ipire  City  Bank,  18    N.  Y.  199; 

4  Garrison  v.  Howe,  17  N.  Y.  45S;  Matter  of  Hollister  Bank,  27  id.  393. 
Mathez   v.  Neidig,  72   id.  100;  Agate  b  90  N.  Y.  353,  369. 

v.    Sands,    73    id.    620;     Wheeler   v.  6  Mathez   v.  A'eidig,  72   N.  Y.  100, 


THE   LIABILITIES    OF   STOCKHOLDERS.  227 

Holders  of  stock  issued  for  property  purchased  under 
the  Manufacturing  Act  are  not  liable  under  this  statute.1  If 
however,  fraudulent  over-valuation  be  shown,  and  that  the 
stock  greatly  exceeded  in  amount  the  value  of  the  property 
for  which  it  was  issued,  and  that  the  trustees  issued  it  with 
knowledge  of  the  real  value  of  the  property,  such  facts  are 
sufficient  to  sustain  a  finding  of  fraudulent  intent  which  will 
render  the  stockholders  liable.2  These  are  questions  of  fact 
to  be  submitted  to  a  jury  and  their  verdict  is  generally  con- 
clusive as  to  such  intent.3 

Even  where  the  common  device  is  resorted  to  of  issuing 
stock  for  property  purchased,  as  paid-up  stock,  and  of  return- 
ing a  portion  of  it  to  the  company  as  a  working  capital,  it  is 
not  conclusive  of  a  fraudulent  over-valuation,  even  where  no 
estimate  of  the  value  of  such  property  is  made,  but  the 
question  of  the  intent  of  the  trustees  in  issuing  the  stock, 
and  whether  it  was  for  the  purpose  of  evading  the  statute  is 
a  question  for  the  jury  to  determine.4 

Where  the  capital  has  been  issued  for  property,  a  stock- 
holder to  whom  the  stock  has  been  delivered  for  an  adequate 
consideration  by  the  corporation  cannot  be  compelled  to  pay 
the  difference  between  the  par  value  of  the  stock  and  the 
value  of  the   property  for  which  it  was  originally  issued,  for 

Andrews  v.  Murray,   32    Barb.  354;  fillan,    46    Hun,    24S;    Knowles    v. 

Richardson  v.  Abendroth,  43  id.  162;  Duffy,  40  id.  4S5.      It  was  so  held  in 

Woodruff,  etc.,   Iron    Works  v.  Chit-  this  case  in  the  Supreme  Court,  First 

tenden,    4    Bosw.    406;    Deming   v.  Department,   reversing   a   judgment 

Puleston,    33    N.  Y.   Super.  (J  .  &  S.)  in  favor  of  plaintiff  entered  on  a  trial 

231.  before  a  referee  on  the  ground  that 

1  Laws    of    1S53,    chap.    333,    §  2;  the  facts   were   not  sufficient  to  es- 

Bonnellv.  Griswold,  80  N.  Y.  128.  tablish   a   fraudulent    over-valuation 

-  Schenck   v.    Andrews,    57    N.   Y.  and    intent    to    evade    the    statute. 

133;  Boynton  v.  Andrews,  63  id.  93;  Upon  the  same  state  of    facts,  how- 

Douglass  v.  Ireland,  73  id.  100.  ever,     the    General    Term     of     the 

3  Lake  Superior  Iron  Co.  v.  Drexel,  Second  Department  affirmed  a  judg- 
90  N.  Y.  87;  Blake  v.  Griswold,  103  ment  against  the  same  defendant, 
id.  429.  See    Thurston   v.    Duffy,    3S     Hun, 

4  National  Tube  Works  Co.  v.  Gil-  327. 


228  THE    LAW    OF   CORPORATIONS. 

the  benefit  of  the  creditors  of  the  company,  where  the  same 
has  been  received  by  him  in  good  faith.1 

A  stockholder  is  not  liable  for  debts  falling  due  before 
he  became  a  stockholder,2  although  he  may  be  on  instal- 
ments of  a  debt  becaming  due  while  he  is  a  stockholder, 
although  the  debt  was  contracted  before  he  became  one.3 

The  liability  of  stockholders  cannot  be  revived  or  ex- 
tended by  any  renewal  or  extension  of  the  indebtedness 
which  the  creditors  may  make  with  the  corporation.  Thus 
where,  by  the  acceptance  of  a  note,  the  time  of  payment  of 
an  original  indebtedness  is  extended,  and  the  plaintiff  does 
not  bring  an  action  against  the  corporation  within  one  year 
from  the  time  the  original  debt  became  due,  it  was  held  that 
a  stockholder  was  not  liable.4 

It  is  no  defence  to  an  action  of  this  kind  that  the  time  to 
file  a  certificate  of  payment  of  stock  had  not  expired,  as  the 
liability  attaches  at  once  upon  incurring  the  debt.5  But 
where  the  statute  requires  that  the  action  shall  be  com- 
menced within  a  certain  time  after  one  has  ceased  to  be  a 
stockholder,  it  is  a  good  defence  to  an  action  seeking  to 
charge  him  with  the  liability  for  the  corporate  debts  that 
before  that  time  a  judgment  had  been  rendered  against  the 
corporation  sequestrating  its  property  and  appointing  a 
permanent  receiver,  and  that  the  corporation  had  not  since 
transacted  any  business,  and  that  the  receiver  had  taken 
possession  of  its  property  and  distributed  the  proceeds  among 
its  creditors  pursuant  to  an  order  of  the  court.  In  such  a 
case  it  was  held  that  the  stockholder  ceased  to  be  such  at 
the  date  of  such  judgment.6 

'   VanCottv.   Van  Brunt,  32  N.  Y.  aff'd    on  opinion   below,    71    Y.    Y. 

535.  597;  /agger  Iron   Co.   v.    Walker,  76 

'2  Johnson  v.    Underbill,   52    N.  Y.  N.    Y.    521;    Hardman    v.    Sage,    47 

203;  Phillips  v.   7  herasson.  11  Hun,  Hun,  230. 
141.  5  King  v.  Duncan,  38  Hun,  461. 

3  McMaster  v.  Davidson,  29  Hun,  6  Hollingshead  v.     Woodward,   107 
54--  N.  Y.  96. 

4  Pa  not t    v.     Colby,   6    Hun,    55; 


THE   LIABILITIES    OF   STOCKHOLDERS.  229 

Liability  to  Laborers,  etc.— The  question  as  to  what  per- 
sons constitute  the  class  of  "  laborers,  servants  and  appren-  . 
tices,"  as  contained  in  the  statute,  was  discussed  in  the  case 
of  Wakefield  v.  Fargo,'  and  Judge  Danforth,  in  giving  the 
opinion  of  the  Court,  thus  states  the  true  rule  of  construc- 
tion :  "  The  clause  in  question  creates  a  privileged  class  into 
which  none  but  the  humblest  employees  are  admitted,  and 
the  distinction,  which  in  practical  life  is  easily  discernable 
between  president,  director,  officer,  agent  and  laborer,  at 
once  disappears  in  the  face  of  such  a  judgment  as  we  have 
before  us.  Clearly  a  distinction  is  made  by  the  statute. 
The  stockholder  must  pay,  not  debts  due  to  all  employees 
of  the  company,  but  those  due  to  '  laborers,  servants  and 
apprentices,'  and  not  all  debts  due  to  them,  but  only  such 
as  are  due  for  '  services'  performed  for  such  corporation.  It 
is  plain,  we  think,  that  the  services  referred  to  are  menial  or 
manual  services, — that  he  who  performs  them  must  be  of  a 
class  whose  members  usually  look  to  the  reward  of  a  day's 
labor,  or  service,  for  immediate  or  present  support,  from 
whom  the  company  does  not  expect  credit,  and  to  whom  its 
future  ability  to  pay  is  of  no  consequence  ;  one  who  is  re- 
sponsible for  no  independent  action,  but  who  does  a  day's 
work,  or  a  stated  job,  under  the  direction  of  a  superior." 
After  stating  Blackstone's  definition  of  the  different  classes 
of  servants,  he  says :  "  The  word  used  is  no  doubt  broad 
enough,  and  might,  without  exaggeration,  represent  all  per- 
sons connected  with  the  administration  or  furtherance  of  the 
affairs  of  a  corporation  ;  in  this  instance,  from  the  one  who 
dips,  or  bottles  the  water,  to  the  president,  but  this  would 
manifestly  be  too  general.  '  Laborer  or  apprentice,'  are 
words  of  limited  meaning,  and  refer  to  a  particular  class  of 
persons  employed  for  a  defined  and  low  grade  of  service  per- 
formed, as  before  suggested,  without  responsibility  for  the 
acts  of  others,  themselves  directed  to  the  accomplishment  of 
an  appointed  task,  under  the  supervision  of  another.     They 

1  90  N.  Y.  213. 


230  THE   LAW    OF   CORPORATIONS. 

necessarily  exclude  persons  of  higher  dignity,  and  require- 
that  one  who  seeks  his  pay  as  servant  should  be  of  no 
higher  grade  than  those  enumerated  as  laborers  or  of  lesser 
quality.  A  statute  which  treats  of  persons  of  an  inferior  rank 
cannot  by  any  general  words  be  so  extended  as  to  embrace  a 
superior  ;  the  class  first  mentioned  is  to  be  taken  as  the 
most  comprehensive.  4  Spccialia  gcncralihis  derogant  /' '  It 
was  accordingly  held,  in  that  case,  that  one  who  was  em- 
ployed at  a  yearly  salary  as  a  bookkeeper  and  general  mana- 
ger was  not  a  "  servant"  of  the  corporation  within  the  mean- 
ing- of  the  statute. 

It  is  not  sufficient  that  the  services  involve  some  manual 
labor,  if  these  are  incidental  to  the  general  employment.  It 
has,  therefore,  been  held  that  the  secretary  of  a  company  does 
not  come  within  the  provisions  of  the  statute  ; '  nor  a  con- 
sulting engineer;2  nor  a  bookkeeper  and  general  manager  ; 3 
nor  a  general  manager;4  nor  a  general  agent;5  nor  a  sales- 
man selling  goods  on  salary  and  on  commissions  ;6  nor  a  con- 
tractor.7 

Where,  however,  manual  labor  comprises  the  general 
element  of  a  person's  employment,  it  has  been  held  that  he 
could  enforce  the  liability  of  stockholders  under  this  section, 
even  though  he  might  incidentally  perform  some  services  of 
a  higher  character. 8 

In  many  of  the  earlier  cases  the  distiction  given  above 
has  been  overlooked,  and  the  decisions,  given  in  such  cases, 
could  not  be  safely  followed  at  the  present  time.9 

A  cause  of  action  accruing  to  a  laborer  under  this  pro- 

1  Coffin  v.  Reynolds,  37  N.  Y.  640.  5  Dean  v.  De  Wolf,  16  Hun,  1S6, 

2  Ericsson  v.  Brown,  38  Barb.  390.       aff'd  82  N.  Y.  626;  Krauser  v.  Ruckel, 

3  Wakefield  v.  Fargo,  90  N.Y.  213.        17  id.  4&3- 

In  a  late  case  it  has  been   held  that  6  People  v.  Remington,  45  Hun,  329. 

one  rendering  services   strictly  as  a  '  Ail-in  v.   Wasson,  24  N.  Y.  4S2. 

bookkeeper  came  within  the  provis-  8  Short  v.  Medberry,  29  Hun,  39. 

ions    of    the    statute.       Chapman   v.  9  See  Williamson  v.  Wadsworth,  49 

Chumar,  Sup.  Ct.  Genl.  Term,   7  N.  Barb.   294;  Hovey  v.    Ten  Broeck,   3 

Y.  Supp.  230.  Robt.  316. 

4  Hill  v.  Spencer,  61  N.  Y.  274. 


THE   LIABILITIES    OF   STOCKHOLDERS. 


2^1 


vision  may  be  enforced  by  his  assignee  ; '  but  not  probably 
by  a  laborer  who  is  himself  a  stockholder,  as  he  and  the 
stockholder  whom  he  seeks  to  charge  are  copartners  so  far 
as  such  liability  is  concerned,  and  are  equally  liable." 


1  Kincaid  v.  Dwindle,  59  N.  Y. 
543;  Krauser  v.  Ruckel,  17  Hun, 
463;  Pilcherv.  Brayton,  id.  429. 

2  Richardson  v.  Abendroth,  43  Barb. 
162.  By  Laws  of  1889,  chap.  3S1,  it 
was  provided  that  every  manufactur- 
ing, mining  or  quarrying,  mercantile, 
railroad,  street  railway,  canal,  steam- 
boat, telegraph  and  telephone  cor- 
poration, and  every  incorporated  ex- 
press company  and  water  company, 
not  municipal,  must  pay  the  wages 
of  their  employees  in  cash.  Laws 
of  1S9O,  chap.  3S8,  contain  the  fol- 
lowing provisions  in  regard  to  the 
weekly  payment  of  wages  by  certain 
corporations  : 

"Section  i.  Every  manufactur- 
ing, mining  or  quarrying,  lumbering, 
mercantile,  railroad,  surface,  street, 
electric  and  elevated  railway  (except 
steam  surface  railroads),  steamboat, 
telegraph,  telephone  and  municipal 
corporation,  and  every  incorporated 
express  company  and  water  company 
shall  pay  weekly,  each  and  every 
employee  engaged  in  its  business, 
the  wages  earned  by  such  employee 
to  within  six  days  of  the  date  of  such 
payment:  provided,  however,  that  if 
at  any  time  of  payment  any  employee 
shall  be  absent  from  his  regular  place 
of  labor,  he  shall  be  entitled  to  said 
payment  at  any  time  thereafter  upon 
demand. 

"Sec.  2.  Any  corporation  violating 
any  of  the  provisions  of  this  act  shall 
be  liable  to  a  penalty  not  exceeding 
fifty  dollars  and  not  less  than  ten 
dollars  for  each  violation,  to  be  paid 
to  the  people  of  the  state  and  which 
may  be  recovered  in  a  civil  action  : 
provided  an  action  for  such  violation 
is  commenced  within  thirty  days  from 
the  date  thereof.  The  factory  in- 
spectors of  this  state,  their  assistants 
or  deputies,  may  bring  an  action  in 


the  name  of  the  people  of  the  state 
as  plaintiff  against  any  corporation 
which  neglects  to  comply  with  the 
provisions  of  this  act  for  a  period  of 
two  weeks,  after  having  been  notified 
in  writing  by  such  inspectors,  assist- 
ants or  deputies,  that  such  action  will 
be  brought.  On  the  trial  of  such  ac- 
tion, such  corporation  shall  not  be 
allowed  to  set  up  any  defence  for  a 
failure  to  pay  weekly  any  employee 
engaged  in  its  business  the  wages 
earned  by  such  employee  to  within 
six  days  of  the  date  of  such  payment 
other  than  a  valid  assignment  of  such 
wages  or  a  valid  set-off  against  the 
same, or  the  absence  of  such  employee 
from  his  regular  place  of  labor  at  the 
time  of  payment,  or  an  actual  tender 
to  such  employee  at  the  time  of  pay- 
ment of  the  wages  so  earned  by  him, 
or  a  breach  of  contract  by  such  em- 
ployee,or  a  denial  of  the  employment. 
No  assignment  of  future  wages,  pay- 
able weekly,  under  the  provisions  of 
this  act  shall  be  valid  if  made  to  the 
corporation  from  whom  such  wages 
are  to  become  due,  or  to  any  person 
on  behalf  of  such  corporation,  or  if 
made  or  procured  to  be  made  to  any 
person  for  the  purpose  of  relieving 
such  corporation  from  the  obligation 
to  pay  weekly  under  the  provisions  of 
this  act.  Nor  shall  any  of  said  cor- 
porations require  any  agreement  from 
any  employee  to  accept  wages  at 
other  periods  than  as  provided  in 
section  1  of  this  act  as  a  condition  of 
employment. 

"Sec.  3.  The  provisions  of  sections 
263  and  3S4  of  the  Code  of  Civil  Pro- 
cedure shall  apply  to  and  govern  any 
proceedings  brought  to  enforce  the 
provisions  of  this  act,  and  it  is  hereby 
made  the  duty  of  the  attorney-general 
of  this  state  to  appear  in  behalf  of 
such  proceedings  brought  hereunder 
by  the  factory  inspectors  of  this  state, 
their  assistants  or  deputies. 

"  Sec.  4.  This  act  shall  take  effect 
on  the  first  day  of  July,  eighteen 
hundred  and  ninety." 


232 


THE    LAW    OF    CORPORATIONS. 


CHAPTER    VIII. 
LEGAL    ACTIONS    AND    PROCEEDINGS. 

The  right  to  sue  and  be  sued  in  the  courts  of  this  state 
is  one  conferred,  with  certain  restrictions,  upon  all  corpora- 
tions.1 The  practice  governing  such  actions  is  generally 
regulated  by  the  Code  of  Civil  Procedure.2 

An  action  may  be  maintained  by  a  foreign  corporation 
in  like  manner  and  subject  to  the  same  regulations  as  where 
the  action  is  brought  by  a  domestic  corporation,  except  as 
otherwise  especially  prescribed  by  law.  But  a  foreign  cor- 
poration cannot  maintain  an  action  founded  upon  an  act 
or  upon  a  liability  or  obligation  express  or  implied,  arising 
out  of,  or  made  and  entered  into  in  consideration  of,  an  act 
which  the  laws  of  the  state  forbid  a  corporation  or  associa- 
tion of  individuals  to  do,  without  express  authority  of  law.3 

A  foreign  corporation  may  enforce  any  remedy  given  to 
it  by  the  statutes  of  the  state  to  the  same  extent  and  in  the 
same  manner  as  a  citizen  of  the  state,  even  where  such  a 
course  may  give  it  an  advantage  which  it  might  not  be  able 
to  secure  in  the  courts  of  the  state  where  it  has  its  domicile.4 


1  Rev.  Stat.,  part  I.  chap,  xviii. 
title  3.  §  I- 

2  Corporations  may  be  proceeded 
against  criminally,  upon  information 
against  the  corporation,  and  upon  the 
return  of  the  summons  the  magistrate 
must  investigate  the  charges  in  the 
same  manner  as  in  the  case  of  a  nat- 
ural person,  so  far  as  such  proceed- 
ings are  applicable  ;  and  if  he  return 
a  certificate  that  there  is  sufficient 
cause  to  believe  the  corporation 
guilty  of  the  offence  charged,  the 
grand  jury  may  proceed  and  indict  it 


in  the  same  manner  as  a  natural 
person. 

Where  a  fine  is  imposed  upon  a 
corporation  on  conviction,  it  may  be 
collected  by  the  sheriff  in  the  same 
manner  as  upon  an  execution  in  a 
civil  action. 

Code  of  Criminal  Procedure, 
§^675-682. 

3  Code  Civ.  Proa,  ^  1779. 

4 Hibernia  Nafl  Bank  v.  Lacombe, 
84  N.  Y.  367  ;  Diamond  Match  Co. 
v.  Roeber,  106  id.  473. 


LEGAL   ACTIONS   AND    PROCEEDINGS.  233 

And  it  may  assign  its  cause  of  action  to  a  resident  of  this 
statu,  in  order  to  obtain  a  remedy  available  to  a  resident, 
which  it,  as  a  non-resident,  could  not  acquire.'  Such  assign- 
ment, however,  must  be  made  before  an  action  is  com- 
menced by  the  foreign  corporation.  It  cannot  have  the 
retroactive  effect  of  creating  a  right  to  enforce  a  cause  of 
action  which  did  not  exist  in  favor  of  the  assignor  when  the 
suit  was  commenced.2 

An  action  against  a  foreign  corporation  may  be  main- 
tained by  a  resident  of  the  state  or  by  a  domestic  corpora- 
tion for  any  cause  of  action,  irrespective  of  where  the  cause 
of  action  arises,  or  of  whether  the  corporation  have  a  place 
of  business  or  any  property  within  the  state.3  An  exception, 
apparent,  however,  rather  than  real,  lies  in  the  case  of  a 
purely  statutory  cause  of  action,  given  by  the  laws  of  this 
state,  such  as  the  right  of  the  personal  representatives  of 
a  deceased  person  to  bring  an  action  for  causing  his  death. 
In  such  a  case  no  recovery  can  be  had  where  the  death  was 
caused  beyond  the  limits  of  the  state,  unless  it  is  proved 
that  similar  statutes  exist  in  the  state  where  the  death  was 
caused  ;  and  it  is  the  same  whether  defendant  is  a  foreign 
or  a  domestic  corporation.4 

An  action  against  a  foreign  corporation  may  be  main- 
tained by  another  foreign  corporation  or  by  a  non-resident 
in  one  of  the   following  cases  only : 

1.  Where  the  action  is  brought  to  recover  damages  for 
the  breach  of  a  contract  made  within  the  state,  or  relating 
to  property  situated  within  the  state  at  the  time  of  making 
thereof. 

2.  Where  it  is  brought  to  recover  real  property  situated 

1  Mc Bride  v.  The  Farmers'  Bank,  N.Y.  63;  Pope  v.  Terre  Haute  Car  C^ 

26  N.  Y.  450;     Petersen  v.  Chemical  Mfg.  Co.,  S7  id.  137. 
Bank,  32  id.  20.  4  Whitford  V.'  Panama  R.  R.  Co.. 

9  Ervin  v.  Oregon  Ky.  &°  A'az'.Co.,  23  N.  Y.   465  ;    Leonard  v.  Columbia 

28  Hun,  26c).  Steam  Nav.  Co.,  84  id.  4S  ;  Parker  v. 

3  Code  Civ.  Proc,  §  1780  ;  Palmer  Stroud,  9S  id.  379. 
v.  Phoenix  Mutual  Life  Ins.  Co.,    S4 


234  THE   LAW    0F   CORPORATIONS. 

within  the  state    or  a  chattel  which   is  replevied  within  the 
state. 

3.  Where  the  cause  of  action  arose  within  the  state, 
except  where  the  object  of  the  action  is  to  affect  the  title 
to  real  property  situated  without  the  state.1 

A  foreign  corporation  can  be  sued  by  another  foreign 
corporation  or  a  non-resident  only  in  the  cases  above  stated  ;2 
although  where  the  court  has  jurisdiction  of  the  subject- 
matter  of  the  action,  appearance  by  attorney,  and  answering 
generally  in  the  action,  will  confer  jurisdiction  upon  the 
court." 

A  domestic  corporation  is  defined  by  the  Code  as  a  cor- 
poration created  by  or  under  the  laws  of  the  state,  or  located 
in  the  state,  and  created  by  or  under  the  laws  of  the  United 
States,  or  by  or  pursuant  to  the  laws  in  force  in  the  colony 
of  New  York  before  the  19th  day  of  April  in  the  year  1775. 
Every  other  corporation  is  a  foreign  corporation. 4 

A  corporation  is  a  citizen  of  the  state  under  whose  laws 
it  is  incorporated,  and  has  no  legal  existence  beyond  the 
bounds  of  the  sovereignty  by  which  it  is  created,  and  pos- 
sesses in  another  jurisdiction  only  those  rights  which  the 
comity  of  states  confers  upon  it.5 

It  has  been  held  in  this  state  that  a  national  bank  organ- 
ized and  doing  business  in  the  state  is  a  domestic  corpora- 
tion ;6  and  so  is  a  corporation  consolidated  under  the  laws 
of  this  state  from  several  foreign  corporations.7 

The  principles  upon  which  foreign  corporations  may  sue 
and  be  sued  in  the  courts  of  this  state  were  discussed  in  the 

1  Code  Civ.  Proc,  §  17S0.  4  Code  Civ.Proc.,§  3343.subdiv.18. 

^Robinson    v.  Oceanic  Steam  Arav.  5  Merrick  v.   Fan  Santvoord,  34  N. 

Co.,  112  N.  Y.  315  ;   Ervin  v.  Oregon  Y.  20S  ;   Stevens  v.  Phoenix  Ins.   Co., 

Ry.  6°  Nav.  Co.,  28  Hun,  269  ;    Du-  41  id.  149  ;    People  v.  Fire   Ass'n  of 

quesne  v.  Penn  Bank,  35  id.  390.  Phila.,  92  id.  311. 

3  McCormick   v.  Penn.  Cent.  R.  R.  6  Market   Nafl  Bank    v.    Pacific 

Co.,  49  N.  Y.  303  ;    Attorney-General  Nat' I  Bank,    Sup.  Ct.,    Sp.  Term,   2 

v.  Guardian  Mutual  Life   Ins.   Co.,  Civ.  Proc.  Rep.  330. 

77  id.  272.  '  Matter  of  Sage,  70  N.  Y.  220. 


LEGAL   ACTIONS   AND    PROCEEDINGS.  235 

case  of  Plimpton  v.  Bigelow?  and  it  was  said  by  Andrews, 
J.,  in  giving  the  opinion  of  the  court,  that  "  suits  by  or 
against  foreign  corporations  are  not  maintained  on  the 
theory  that  the  corporation  litigant  is  here  in  person,  or 
that  the  corporate  entity  attends  its  officers  in  their  migra- 
tions from  one  state  to  another,  or  that  it  is  itself  present 
wherever  its  property  may  be  or  its  business  may  be 
transacted.  The  jurisdiction  rests  upon  the  ground  that 
as  a  corporation  must  act  by  agents,  it  may,  through 
its    agents,    subject    itself    to   the  jurisdiction  of  a  foreign 

tribunal Where    a  foreign    corporation    sends    its 

agents  into  another  state  or  transacts  its  business  there, 
availing  itself  of  the  protection  of  the  laws  of  such  state, 
there  is  no  just  reason  why  it  should  not  be  deemed  to 
have  subjected  itself,  through  its  agents,  to  the  jurisdic- 
tion of  the  courts  of  that  state,  and  be  held  to  respond 
to  an  action  brought  against  it  therein,  upon  process 
served  on  its  representatives." 

Jurisdiction  of  the  Courts.  Of  the  Supreme  Court. — The 
Supreme  Court  has  general  jurisdiction,  in  law  and  equity, 
over  all  actions  by  and  against  domestic  and  foreign  cor- 
porations.2 

Same.  Of  Superior  City  Courts. —  The  Superior  City 
Courts,  which  are  the  Court  of  Common  Pleas  for  the  City 
and  County  of  New  York,  the  Superior  Court  of  the  City 
of  New  York,  the  Superior  Court  of  Buffalo  and  the  City 
Court  of  Brooklyn,3  have  jurisdiction  in  an  action  affecting 
real  property,  where  the  real  property  to  which  it  relates  is 
situated  within  the  city  where  the  court  is  located  ;  or  in  an 
action  for  any  other  cause,  where  the  cause  of  action  arose 
within  that  city;  or  where  the  defendant  is  a  resident  of 
that  city;  or  where  the  action  is  to  recover  damages  for  an 
injury  to  real  property,  or  a  chattel  real,  or  for  the  breach 

'93  N.  Y.  592.  3  id.  g3343i  subdv_  r 

-  Code  Civil  Proc.  §,  217. 


236  THE    LAW    OF    CORPORATIONS. 

of  a  contract  express  or  implied,  relative  to  real  property, 
or  a  chattel  real,  where  the  real  property  is  situated  within 
that  city,  or  where  the  defendant  is  a  resident  of  that  city  ; 
or  in  an  action  to  recover  a  chattel,  or  to  foreclose  or  enforce 
a  lien  upon  personal  property,  or  to  recover  damages  for  an 
injury  to  personal  property,  where  the  property  to  which 
the  action  relates  is  situated  within  that  city  at  the  time 
when  the  action  is  commenced;  If  the  property  consists  of 
one  or  more  shares  of  the  capital  stock  of  a  domestic  cor- 
poration, whose  principal  place  of  business  is  located  or 
established  within  that  city,  or  of  a  debt  due  from,  or 
money,  or  a  thing  in  action,  in  the  possession  or  under  the 
control  of,  such  a  corporation,  it  is  deemed  to  be  situated 
within  that  city. 

They  also  have  jurisdiction  in  an  action  brought  by  a  resi- 
dent of  that  city  against  a  foreign  corporation  either  (one) 
to  recover  damages  for  the  breach  of  a  contract  express  or 
implied,  or  a  sum  of  money  payable  by  the  terms  of  a  con- 
tract express  or  implied,  where  the  contract  was  made, 
executed  or  delivered  within  the  state  or  where  the  cause 
of  action  arose  within  the  state;  or  (two)  where  a  warrant 
of  attachment,  granted  in  the  action,  has  been  actually 
levied  within  that  city  upon  the  property  of  the  corpora- 
tion ;  or  (three)  where  the  summons  is  served  by  the  delivery 
of  a  copy  thereof  within  that  city  to  an  officer  of  the  cor- 
poration as  prescribed  by  law. 

They  also  have  jurisdiction  in  an  action  for  the  sale  or 
other  disposition  of  the  property,  or  the  voluntary  dissolu- 
tion of  a  domestic  corporation,  whose  principal  place  of 
business  is  located  or  established  within  that  city ;  or  for 
the  sale  or  other  disposition  of  the  real  property,  situated 
within  that  city,  of  a  domestic  corporation,  wherever  it  is 
located.1 

For  the  purpose  of  determining  the  jurisdiction   of   a 

1  Code  Civ.  Proc,  §  263. 


LEGAL   ACTIONS   AND    PROCEEDINGS.  237 

Superior  City  Court,  in  one  of  the  cases  above  specified,  a 
domestic  corporation,  whose  principal  place  of  business  is 
established  by  or  pursuant  to  a  statute,  or  by  its  articles  of 
association,  or  is  actually  located  within  the  city  where  the 
court  is  located,  is  deemed  a  resident  of  that  city;  and  per- 
sonal service  of  a  summons  made  within  that  city,  as  pre- 
scribed in  the  Code,  or  personal  service  of  a  mandate  whereby 
a  special  proceeding  is  commenced  made  within  that  city  as 
prescribed  in  the  Code  for  personal  service  of  a  summons,  is 
sufficient  service  thereof  upon  a  domestic  corporation,  wher- 
ever it  is  located.' 

Where  a  Superior  City  Court  has  jurisdiction  of  an  action 
or  special  proceeding,  it  possesses  the  same  jurisdiction,  au- 
thority and  power  as  is  possessed  by  the  Supreme  Court  in  a 
like  case;  and  it  may  render  any  judgment  or  grant  either 
part)-  an)-  relief  which  the  Supreme  Court  might  render  or 
grant  in  a  like  case,  and  may  enforce  its  mandates  in  the 
same  manner  as  the  Supreme  Court." 

Same.  Of  Superior  Court  of  Buffalo. — In  addition  to  the 
jurisdiction  given  to  the  Superior  City  Courts  generally,  the 
Superior  Court  of  Buffalo  is  expressly  given  jurisdiction  in 
an  action  against  a  domestic  corporation  which  transacts  its 
general  business  in  that  city,  or  has  an  office  or  agency  in 
that  city  for  the  transaction  of  business  ;  or  against  a  foreign 
corporation  which  has  property  in  that  city,  or  an  agency. 
therein.3 

Same.  Of  City  Court  of  New  York.— The  City  Court  of 
New  York  has  jurisdiction  in  an  action  against  a  foreign 
or  domestic  corporation,  where  the  complaint  demands 
judgment  for  a  sum  of  money  only,  or  to  recover  one  or  more 
chattels,  with  or  without  damages  for  the  taking  or  deten- 
tion thereof,4  subject  to  the  limits  of  its  moneyed  jurisdic- 
tion.5 A  summons  from  this  court  can  only  be  served  per- 
sonally with  the  limits  of  the  City  of  New  York.6 

1  Code  Civ.  Proc,  §  264.  'l  Id.  £  267.  3  Id.  £  292. 

4  Id-  §  315.  -5  Id.  §  316.  6Id.  §  338. 


238  THE    LAW   OF   CORPORATIONS. 

Same.  Of  County  Courts. — For  the  purpose  of  determin- 
ing the  jurisdiction  of  a  County  Court  a  domestic  corpora- 
tion whose  principal  place  of  business  is  established  by  or 
pursuant  to  a  statute,  or  by  its  articles  of  association,  or  is 
actually  located  within  the  county,  is  deemed  a  resident  of 
the  county,  and  a  personal  service  of  a  summons  made 
within  the  county,  or  personal  service  of  a  mandate  whereby 
a  special  proceeding  is  commenced,  made  within  the  county 
as  prescribed  for  personal  service  of  a  summons,  is  sufficient 
service  upon  a  domestic  corporation  wherever  it  is  located.1 

Same.  Of  City  Court  of  Yonkcrs. — The  jurisdiction  of 
the  City  Court  of  Yonkers  extends  to  an  action  against  a 
foreign  or  domestic  corporation  wherein  the  complaint  de- 
mands judgment  for  a  sum  of  money  only,  or  to  an  action 
to  recover  a  chattel,2  but  subject  to  the  limits  of  its  moneyed 
jurisdiction.3  A  summons  from  this  court  can  be  served  at 
any  place  within  the  County  of  Westchester,  but  not  else- 
where.4 

Same.  Of  Courts  of  Justices  and  District  Courts  of  Neze 
York. — Subject  to  the  limits  of  its  jurisdiction  a  corporation 
may  sue  or  be  sued  in  a  Justice's  Court,5  or  in  a  District 
Court  of  the  City  of  New  York  where  it  has  an  office  in  that 
city,0  or  in  the  Municipal  Court  of  the  City  of  Rochester.  7 

Same.  Of  Courts  of  Inferior  Jurisdiction  Generally. — The 
jurisdiction  of  the  superior  city  courts,  or  other  courts  of 
inferior  jurisdiction,  is  local  and  confined  to  causes  of  ac- 
tion in  which  the  property  affected  is  within  the  limits  of 
the  territorial  jurisdiction  of  the  court,  or  where  the  cause 
of  action  arose  within  such  limits,  or  to  cases  in  which  the 
defendant  resides,  within  the  jurisdiction  of  the  court  ;  and 
such  a  court  has  no  jurisdiction  of  an  action  against  a  cor- 
poration where  the  cause  of  action  arises,  and  the  business 

1  Code  Civ.  Proc,  §  341.   See    4  Id.  §  3205. 
infra.  5  Id.  §  2S65. 

2  Id.  §  3203.  6  Id.  §  3215- 

3  Id.  §  3204.  '  Id.  §  3226. 


LEGAL   ACTIONS   AND    PROCEEDINGS.  239 

of  the  corporation  is  transacted,  outside  of  the  limits  of  the 
city  in  which  such  court  is  located.1  It  is  not  necessary  to 
raise  the  question  of  jurisdiction  by  answer,  but  it  may  be 
taken  at  an}-  time,  and  the  court  will,  when  its  attention  is 
called  to  the  fact,  dismiss  the  action  ;  nor  can  the  court  in 
such  a  case  acquire  jurisdiction  by  consent  of  the  parties." 

Service  of  Summons. — Personal  service  of  the  summons 
upon  a  defendant,  being  a  domestic  corporation,  must  be 
made  by  delivering  a  copy  thereof,  within  the  state,  to  the 
president  or  other  head  of  the  corporation,  the  secretary 
or  clerk  to  the  corporation,  the  cashier,  the  treasurer,  or  a 
director  or  managing  agent.3 

Personal  service  of  the  summons  upon  a  defendant,  be- 
ing a  foreign  corporation,  must  be  made  by  delivering  a  copy 
thereof  within  the  state,  as  follows  : 

1.  To  the  president,  treasurer  or  secretary,  or,  if  the 
corporation  lacks  either  of  those  officers,  to  the  officer  per- 
forming corresponding  functions  under  another  name. 

2.  To  a  person  designated  for  the  purpose  by  a  writing 
under  the  seal  of  the  corporation  and  the  signature  of  its 
president,  vice-president,  or  other  acting  head,  accompanied 
with  the  written  consent  of  the  person  designated  and  filed 
in  the  office  of  the  secretary  of  state.  The  designation 
must  specify  a  place  within  the  state  as  the  office  or  resi- 
dence of  the  person  designated  ;  and  if  it  is  within  a  citv, 
the  street  and  street  number,  if  any,  or  other  suitable 
designation  of  the  particular  locality.  It  remains  in  force 
until  the  filing  in  the  same  office,  of  the  written  revocation 
thereof,  or  of  the  consent  executed  in  like  manner  ;  the  per- 
son designated  may  from  time  to  time  change  the  place 
specified  as  his  office  or  residence  to  some  other  place  with- 
in the  state  by  a  writing  executed  by  him  and  filed  in  like 
manner.     The  secretary  of  state  may  require  the  execution 

1  Landers  v.    Staten    Island  R.  R.       Ins.  Co.  90   N.   Y.   526;  Robinson  v. 
Co.  53  N.  Y.  450.  Oceanic  Steam  Xav.  Co.  112  id.  315. 

*  Davidsburghv. Knickerbocker  Life  3  Code  Civ.  Proc,  £  431. 


240  THE   LAW   OF   CORPORATIONS. 

of  any  instruments  so  specified  to  be  authenticated  as  he 
deems  proper,  and  he  may  refuse  to  file  it  without  such  au- 
thentication. An  exemplified  copy  of  a  designation  so  filed 
accompanied  with  a  certificate  that  it  has  not  been  revoked," 
is  presumptive  evidence  of  the  execution  thereof,  and  conclu- 
sive evidence  of  the  authority  of  the  officer  executing  it. 

3.  If  such  a  designation  is  not  in  force,  or  if  neither  the 
person  designated  nor  an  officer  specified  in  sub-division 
first  can  be  found  with  due  diligence,  and  the  corporation 
has  property  within  the  state,  or  the  cause  of  action  arose 
therein,  to  the  cashier,  a  director  or  a  managing  agent,  of 
the  corporation  within  the  state.1 

Authorities  upon  the  subject  of  bringing  actions  against 
foreign  corporations  are  collated  and  discussed  in  the  case  of 
Gibbs  v.  The  Queen  Insurance  Company;  and  it  was  there 
held  that,  when  a  foreign  corporation  has  designated  an 
agent  in  compliance  with  the  provisions  of  the  laws  of  this 
state  upon  whom  process  may  be  served,  it  thereby  sub- 
mits itself  to  the  jurisdiction  of  the  courts  of  this  state,  having 
authority  to  act,  and,  by  service  of  a  summons  upon  a  person 
so  designated,  the  court  acquires  jurisdiction  and  may  ren- 
der a  judgment  valid  and  capable  of  being  enforced  upon 
any  property  of  the  defendant  within  its  jurisdiction. 

In  an  action  in  the  Supreme  Court,  where  the  summons 
is  served  by  delivering  a  copy  within  the  state  to  the  presi- 
dent, secretary  or  treasurer  of  a  corporation,  it  is  not  es- 
sential that  the  officer  should  be  here  in  his  official  capacity, 
or  engaged  in  the  business  of  the  corporation,  or  that  the 
cause  of  action  should  have  arisen  within  the  state,  and  a 
judgment  against  a  foreign  corporation,  in  an  action  so  com- 
menced, will  be  valid  for  every  purpose  within  this  state, 
and  can  be  enforced  against  any  of  its  property  at  any  time 
found  within  the  state.3 

1  Code  Civ.  Proc,  §  432.  Co.    70    N.    Y.    223;    Pope   v.    Terre 

S  63  N,  Y.   114.  Haute  Car  <5r=  Mfg.   Co.  S7  id.   137. 

3  Hillcr   v.    Burlington,  etc.,  R.  R. 


LEGAL  ACTIONS  AND    PROCEEDINGS.  241 

If  the  summons  is  not  served  upon  any  of  the  officers 
above  named,  and  there  is  no  person  within  the  state  desig- 
nated for  the  purpose  of  accepting  a  service  of  summons,  it 
may  be  served  upon  a  cashier,  a  director  or  a  managing 
agent  of  the  corporation  within  the  state,  provided  that 
the  cause  of  action  arose  in  the  state,'  or  that  the  corpora- 
tion has  property  within  the  state."  The  Code  does  not 
specif\r  the  extent  of  the  agency  required  to  bind  a  corpo- 
ration by  service  of  process,  but  the  agent  must  be  of  suffi- 
cient character  and  rank  to  make  it  reasonably  certain  that 
the  defendant  will  be  apprised  of  the  service  made."  Thus 
where  it  appears  that  the  agent  is  of  inferior  rank,  having 
no  close  relations  with  the  company  sought  to  be  served, 
service  of  a  summons  upon  such  an  agent  or  servant  will 
be  set  aside  on  motion,  and  an  appearance,  for  that  purpose 
only,  will  not  confer  jurisdiction.' 

Same.  Justices  Courts. — A  summons  out  of  Justice's 
Court  may  be  served  upon  a  corporation  by  delivering  a 
copy  thereof  to  an  officer  or  person  to  whom  a  copy  of  the 
summons  in  an  action  brought  against  the  corporation  in 
the  Supreme  Court  might  be  delivered,  or  to  any  director 
or  trustee  of  the  corporation  by  whatever  official  title  he  is 
called/  Where  the  defendant  to  be  served  is  a  domestic 
railroad  corporation,  and  no  officer  thereof  resides  in  the 
county  to  whom  a  copy  of  the  summons  may  be  delivered  as 
above  prescribed,  it  may  be  personally  served  by  delivering 
a  copy  thereof  to  a  local  superintendent  of  repairs,  freight 
agent,  agent  to  sell  tickets,  or  station-keeper  of  the  corpo- 
ration, residing  in  the  county,  unless,  at  least  thirty  days  be- 
fore it  was  issued,  the  corporation  has  filed  in  the  office  of 


1  Childs  v.  Harris.    Mfg.    Co.    104  4  Sterett  v.  Denver  and  Rio  Grande 

N.  Y.  477.  R.    Co.    17  Hun,  316;  Redding  ton  v. 

'2  Barnes   v.  Mobile  &°  JV.    IV.    R.  Mariposa    Land   or5    M.    Co.    19    id. 

R.  Co.  12  Hun,  126.  405. 

:;  Palmer  v.    Pennsylvania    Co.    35  5  Code  Civ.  Proc.  §  2S79. 
Hun,  369.     Affirmed  99  N.  Y.  679. 


242  THE   LAW   OF   CORPORATIONS. 

the  clerk  of  the  county  a  written  instrument  designating  a 
person  residing  in  the  county  upon  whom  process  issued 
by  a  justice  of  the  peace  against  it  may  be  served  ;  in  which 
case  the  summons  may  be  personally  served  by  delivering 
a  copy  to  the  person  so  designated.1 

Where  the  defendant  to  be  served  is  a  corporation  doing 
business  in  the  state  as  an  express  company,  and  no  person 
resides  in  the  county  to  whom  a  copy  of  the  summons  may 
be  delivered  as  prescribed  above,  it  may  be  served  by  de- 
livering a  copy  thereof  to  any  local  or  general  agent,  agent 
to  receive  freight  or  parcels,  route  agent  or  messenger  of 
the  defendant  residing  in  the  county,  unless  at  least  thirty 
days  before  it  was  issued,  the  defendant  has  made  a  desig- 
nation similar  to  that  provided  for  railroad  corporations 
above.2 

Where  a  person  has  been  so  designated,  and  the  desig- 
nation has  been  revoked,  or  it  appears  by  affidavit,  or  return 
of  the  constable  to  whom  a  summons  has  been  duly  deliv- 
ered for  service,  that  the  person  is  dead,  or  has  ceased  to  re- 
,side  within  the  count)',  or  that  he  cannot  after  due  diligence 
be  found  within  the  county  so  as  to  deliver  a  copy  of  the 
summons  to  him,  it  may  be  served  as  if  the  designation  had 
not  been  made.  Such  a  designation  may  be  revoked  by  a 
writing  executed  and  filed  in  like  manner  as  required  for 
the  purpose  of  making  the  designation.3 

Service  by  Publication. — -An  order  directing  the  service  of 
a  summons  upon  a  defendant  without  the  state,  or  by  publi- 
cation, may  be  made  where  the  defendant  to  be  served  is  a 
foreign  corporation  ;  or,  being  a  domestic  corporation, 
where  an  attempt  was  made  to  commence  the  action  against 
the  defendant  before  the  expiration  of  the  limitation  appli- 
cable thereto,  and  the  limitation  would  have  expired  within 
sixty  days  next  preceding  the  application  if  the  time  had 
not  been  extended  by  the  attempt  to  commence  the  action.4 

1  Code  Civil  Proc,  §  2SS0.  3  Id.  §  2SS2. 

5  Id.  §2881.  4  Id.  §  43S. 


LEGAL  ACTIONS   AND    PROCEEDINGS.  243 

The  order  must  be  founded  upon  a  verified  complaint, 
showing  a  sufficient  cause  of  action  against  the  defendant  to 
be  served,  and  proof  by  affidavit  of  the  additional  facts  re- 
quired to  obtain  it;  and,  where  the  application  is  made 
upon  the  ground  that  the  defendant  is  a  foreign  corpora- 
tion, that  the  plaintiff  has  been  or  will  be  unable,  with  due 
diligence,  to  make  personal  service  of  the  summons.1 

Pleadings. — In  an  action  brought  by  or  against  a  corpo- 
ration, the  complaint  must  aver  that  the  plaintiff  or  the  de- 
fendant, as  the  case  may  be,  is  a  corporation  ;  must  state 
whether  it  is  a  domestic  corporation,  or  a  foreign  corpor- 
ation, and  if  the  latter,  the  state,  country,  or  government 
by  or  under  whose  laws  it  was  created  ;  but  the  plaintiff  need 
not  set  forth,  or  specially  refer  to  any  act  or  proceeding  by 
or  under  which  the  corporation  was  created." 

A  complaint  which  states  only  that  plaintiff  or  defendant 
is  a  foreign  corporation,  without  alleging  the  state  or  country 
under  whose  laws  it  was  created,  is  not  sufficient ;  and  a  de- 
murrer thereto  will  be  sustained  ;3  although  if  it  does  not 
appear  by  the  face  of  the  complaint  that  the  plaintiff  is  a 
corporation,  the  objection  must  be  taken  by  answer,  and  not 
by  demurrer,  as  it  will  not  be  assumed  in  aid  of  a  demurrer 
that  plaintiff  is  a  corporation  ;4  and  where  one  deals  with  an 
association  bearing  a  corporate  name,  and  contracts  with  it  in 
such  name,  he  is  thereby  estopped  from  disputing  its  legal 
incorporation.5 

In  an  action  brought  by  or  against  a  corporation  the 
plaintiff  need  not  prove  upon  the  trial  the  existence  of  the 
corporation,  unless  the  answer  is  verified  and  contains  an 

1  Code  Civ.  Pro.,  §  439.                •  Sup.  Ct.,  Sp.  Term,  10  id.  176. 

3  Id.  §  1775.  4  Irving  Natl.    Bank    v.    Corbett, 

3  C/eggv.  Chicago  Newspaper  Union,  Sup.  Ct.,  Sp.  Term,   10  Abb.  X.   C, 

Sup.  Ct.,  Sp.  Term,  8  Civ.  Pro.  Rep.,  S5;    P/uVnixBank  v.  Donne//,  40  n! 

401;  First  Nat'l  Bank  of  Northamp-  Y.  410. 

ton   v.    Doying,    Com.    Pleas,   Gen'l  6  Commercial  Bank  of  Keokuk  v. 

Term,  11  id.   61;  contra,  see  Hafner  rfeiffer,  10S  N.  Y.  242. 

&  Schoen  Furniture  Co.  v.  Grumnie, 


244 


THE   LAW    OF   CORPORATIONS. 


affirmative  allegation  that  the  plaintiff  or  defendant,  as  the 
case  may  be,  is  not  a  corporation.1 

As  to  what  constitutes  an  "  affirmative  allegation"  suffi- 
cient to  raise  the  issue  of  the  existence  of  a  corporation, 
within  the  meaning  of  the  Code,  does  not  seem  to  be  fully 
settled.  A  denial  of  knowledge  or  information  sufficient  to 
form  a  belief  is  not  such  an  affirmative  allegation  ; 2  nor, 
probably,  is  a  general  denial.3  As  to  whether  an  affirmative 
allegation,  upon  information  and  belief  that  plaintiff  or  de- 
fendant is  not  a  corporation,  is  sufficient  to  raise  the  issue, 
has  not  been  definitely  decided." 

In  an  action  or  special  proceeding  brought  by  or  against 
a  corporation,  the  defendant  is  deemed  to  have  waived 
any  mistake  in  the  statement  of  the  corporate  name,  unless 
the  misnomer  is  pleaded  in  the  answer  or  other  pleading  in 
the  defendant's  behalf.5     The  objection    is    waived    unless 


1  Code  Civ.  Proc,  §  1776. 

2  Concordia  Savings  &*  Aid  Assn. 
v.  Read,  93  N.  Y.  474;  Matter  of 
Petition  of  N.  Y.  L.  &°  W.  R.  R.  Co., 
99  id.  12. 

3  Concordia  Savings  &°  Aid  Ass'n. 
v.  Read,  93  N.  Y.  474;  Commercial 
Bank  of  Keokuk  v.  Pfeiffer,  108  id. 
242. 

4  East  River  Bank  v.  Rogers,  7 
Bosw.,  493;  Bengston  v.  Thingvalla 
Steamship  Co.,  3  Civ.  Pro.  Rep.,  263; 
Arid.  31  Hun,  96.  Neither  of  the 
above  cases  holds  directly  that  an 
affirmative  allegation  by  defendant, 
upon  information  and  belief,  that 
plaintiff  is  not  a  corporation,  is  in- 
efficient to  put  plaintiff  to  his  proof 
of  the  fact.  The  first  case  was  an 
allegation  that  defendant  "  is  in- 
formed and  believes,"  etc.,  which  is 
hardly  the  equivalent  of  an  affirm- 
ative allegation  upon  information 
and  belief  that  plaintiff  is  not  a  cor- 
poration. Moreover,  as  appears  by 
the  head-note  of  that  case   made  by 


the  learned  Chief  Justice  of  the  court, 
the  case  could  have  been  upheld  on 
the  ground  that  defendant,  having 
contracted  with  plaintiff  as  a  corpo- 
ration, was  estopped  from  denying 
that  it  was  one.  Commercial  Bank  0/ 
Keokuk  v.  Pfeiffer,  10S  N.  Y.  242. 

In  the  last  of  the  cases  above 
cited,  the  denial  was  on  information 
and  belief  that  defendant  was  "  a  for- 
eign corporation  as  is  alleged  in  the 
complaint,"  obviously  a  negative 
pregnant,  and  an  allegation  upon  in- 
formation and  belief  as  to  a  fact  that 
was  presumably  within  the  knowl- 
edge of  the  party  pleading. 

As  the  incorporation  of  a  plaintiff 
is  rarely  within  the  personal  knowl- 
edge of  a  defendant,  it  would  seem 
the  fact  should  be  put  in  issue  by 
the  only  allegation  which,  in  most 
cases,  a  defendant  can  truthfully 
make.  See  Bennett  v.  Leeds  Mfg.  Co., 
no  N.  Y.  150. 

5  Code  Civ.  Proc,  §  1777. 


LEGAL  ACTIONS  AND  PROCEEDINGS. 


245 


pleaded,  and    this    as  well   when    the    corporation  suffers  a 
default  as  when  it  appears  and  answers.1 

Verification  of  Pleadings. — The  verification  of  a  pleading 
by  a  domestic  corporation  must  be  made  by  an  officer 
thereof;"  and  this  must  appear  in  the  verification.  Thus,  in 
a  recent  case,  it  was  held  that  the  verification  of  an  answer 
of  a  domestic  corporation  by  one  who  simply  affirms  that 
he  is, 1  "  General  Manager  "  thereof,,stating  nothingin  regard 
to  his  duties,  was  defective  and  insufficient.8  In  another 
case  a  verification  was  held  defective,  when  it  was  made  by 
one  who  stated  in  the  affidavit  that  he  was  the  former  presi- 
dent of  the  defendant,  and  that  all  the  officers,  including  de- 
ponent, had  tendered  their  resignations,  and  that  no  other 
officers  had  yet  been  elected  or  chosen  in  their  places.4 

Where  the  party  is  a  foreign  corporation  the  verification 
may  be  made  by  the  agent  of,  or  attorney  for,  the  party.6 
Where  the  pleading  of  a  domestic  corporation  is  verified  by 
an  officer,  it  is  held  to  be  a  verification  by  a  party,  and  it  is 
not,  therefore,  necessary  to  set  forth  the  grounds  of  belief 
as  to  all  matters  not  stated  upon  knowledge,  nor  why 
the  verification  is  not  made  by  the  party.6 

Cannot  Plead  Usury. — A  corporation  cannot  interpose  the 
defence  of  usury  in  an  action,  and  this  prohibition  ap- 
plies equally  to  foreign  and  domestic  corporations,7  and 
also  to  any  endorser  or  other  surety  upon  a  note  made 
by  such  a  corporation." 


1  Whittlesey  v.  Brants, 74  N.Y.  456. 

2  Code  Civ.  Proc,  §  525. 

*  Meton  &*  Sons  v.  Isham  Wagon 
Co.,  Sup.  Ct.,  Sp.Term,4  N.Y.  Supp., 
215.  In  view  of  the  fact  that  the 
term  "  general  manager"  has  so  well- 
defined  meaning,  and  is  recognized 
in  some  of  the  statutes  and  in  one 
case  (that  of  title  guaranty  compa- 
nies, ante,  p.  57)  as  an  officer  required 
to  be  appointed,  the  correctness  of 
this  decision  may  be  questioned. 

1  Kelley  v.   Woman  Publishing  Co. , 


City  Ct.,  Sp.  Term.,  4  N.Y.  Supp. ,99. 

5  Code  Civ.  Proc,  §  525. 

6  American  Insulator  Co.  v.  Bankers' 
and  Merchants'  Tel.  Co.,  Com.  Pleas, 
Gen.  Term,  7  Civ.  Pro.  Rep.,  443. 

1  Laws  of  1S50,  chap.  172;  South- 
ern Life  Ins.  Co.  v.  Packer,  17  N. 
Y.  51;  Btttterworth  v.  O'Brien,  23 
id.  275;  Belmont  Branch  Bank  v. 
Hodge,  35  id.  65. 

B  Rosa  v.  Battel  field.  33  N.  Y.  665; 
Union  Nat.  Bank  v.  Wheeler,  60  id. 
612;   Stewart  v.  B 'ram hall.  74   id.  85. 


246  THE   LAW    OF   CORPORATIONS. 

Statute  of  Limitations. — The  statute  of  limitations  cannot 
be  pleaded  by  a  moneyed  corporation  in  an  action  to 
enforce  the  payment  of  a  bill,  note,  or  other  evidence  of 
debt  issued  by  such  a  corporation,  or  issued,  or  put  in 
circulation  as  money;'  nor  can  the  statute  of  limitations  be 
pleaded  by  a  foreign  corporation  sued  in  this  state.  Such 
a  corporation  is  in  the  same  position  as  a  natural  person 
absent  from  the  state.2  This  rule  is  carried  so  far  that 
it  has  been  held  that  a  foreign  corporation  cannot  claim  the 
benefit  of  the  statute  of  limitations  even  though  it  had  con- 
tinuously operated  a  railway  within  the  state,  and  had 
a  large  amount  of  property  within  the  state,  and  a  man- 
aging agent  resident  therein.3 

An  exception,  however,  to  this  rule  is  made  in  the  case 
of  an  action  by  an  administrator  against  a  foreign  cor- 
poration to  recover  damages  for  causing  a  death  within  the 
state.  Such  an  action,  it  is  held,  must  be  commenced  with- 
in two  years  after  the  decedent's  death.4 

An  attempt  to  commence  an  action  in  a  court  of  record 
is  equivalent  to  the  commencement  thereof  within  the 
meaning  of  the  provision  of  the  statute  of  limitations,  when 
the  summons  is  delivered  with  the  intent  that  it  shall 
actually  be  served  to  the  sheriff  of  the  county  in  which  the 
corporation  defendant  is  established  by  law,  or  wherein  its 
general  business  is,  or  was  last  transacted,  or  wherein  it 
keeps  or  last  kept  an  office  for  the  transaction  of  business.5 
Preparations  for  Trial.— A  foreign  corporation  suing  in  the 
courts  of  this  state  may  be  compelled  to  give  security 
for  costs  the  same  as  any  other  non-resident.6 

In  an  action  against   a  foreign  or  domestic  corporation 


1  Code.  Civ.  Proc,  §  393-  4  Code  Civ-    Proc,    §  1902;   Lon- 

8  Olcott   v.    Tioga    Railroad  Co.  20  driggan  v.  New  York  6f  N.  H.  R.  R. 

N.  Y.  210.  Co.,  Supr.  Ct.,   Sp.  Term,   12    Abb. 

3  Rathbun   v.    Northern   Cent.   Ry.  N.  C,  273. 

Co.,  50  N.  Y.  656;  Boardman  v.  Lake  5  Code  Civ.  Proc,  §  399. 

Shore  Mich.  So.  Ry.  Co.,  S4  id.  157.  6  Id.  §  326S. 


LEGAL   ACTIONS    AND    PROCEEDINGS.  247 

to  recover  damages  for  the  non-payment  of  a  promissory 
note,  or  other  evidence  of  debt  for  the  absolute  payment 
of  money  upon  demand,  or  at  a  particular  time,  an 
order  extending  the  time  to  answer  or  demur  will  not  be 
granted  except  by  the  court  upon  notice  to  the  plaintiff's 
attorney;'  and  an  action  of  this  kind  is  entitled  to  a  prefer- 
ence on  the  calendar.2 

In  such  an  action,  unless  defendant  serves  with  a  copy  of 
his  answer  or  demurrer  a  copy  of  an  order  of  a  judge  direct- 
ing that  the  issues  presented  by  the  pleadings  be  tried,  the 
plaintiff  may  take  judgment,  as  in  the  case  of  default  in 
pleading,  at  the  expiration  of  twenty  days  after  service  of  a 
copy  of  the  complaint  either  personally  with  the  summons 
or  upon  defendant's  attorney  pursuant  to  his  demand  there- 
for ;  or  if  the  service  of  the  summons  was  otherwise  than 
personal,  at  the  expiration  of  twenty  days  after  this  service 
is  complete.3 

This  section  applies  equally  to  a  demurrer  or  to  an 
answer.4  But  it  is  only  instruments  which  admit  on  their 
face  an  existing  debt  payable  absolutely  that  come  with- 
in its  provisions  and  not  a  conditional  contract,  like  a  policy 
of  life  insurance.5  Nor  does  it  apply  where  the  corporation 
is  an  indorser  upon  a  note  f  nor  where  a  cause  of  action  on 
an  instrument  for  the  absolute  payment  of  mono)-  is  joined 
with  another  cause  of  action  of  a  different  nature.7 

The  production  upon  a  trial  of  a  book  or  paper  belong- 
ing to  or  under  the  control  of  a  corporation  may  be  com- 
pelled in  like  manner  as  if  it  were  in  the  hands  or  under  the 
control  of  a  natural  person.  For  that  purpose  a  sub- 
poena duces  tecum,  or  an  order  of  the  court  must  be  directed 


1  Code  Civ.  Proc,  §  177S.  Life  Ins.  Co.,  88  X.  Y.  424. 

■  Id.  §  7gi,subdv.  S.  "S&orerv.  Times  Prints  Pub.  Co., 

■]  Id.  £  177S.  23  Xorth  East  Rep.,  979. 

4  Ford     v.    Binghamton  Hydraulic  7  Bradley    v.  Albemarle   Fertilizing 
Power  Co.,  54  Hun,  451.  Co.,  City  Ct.,  Sp.  Term,  2  Civ.  Pro. 

5  X-    Y.  Li/e  Ins.  Co.  v.  Universal  Rep.,  50. 


248  THE   LAW    OF   CORPORATIONS. 

to  the  president  or  other  head  of  the  corporation,  or  to  the 
officer  thereof  in  whose  custody  the  book  or  paper  is.' 

In  such  a  case  the  subpoena  or  order  is  deemed  to  be 
sufficiently  obeyed  if  the  book  or  paper  is  produced  by  sub- 
ordinate officer  or  employee  of  the  corporation,  who  pos- 
sesses the  requisite  knowledge  to  identify  it  and  to  testify 
respecting  the  purposes  for  which  it  is  used.  If  the  personal 
attendance  of  a  particular  officer  of  the  corporation  is 
required  a  subpoena  without  a  duces  tecum  clause  must  also 
be-served  upon  him.2 

Where  it  is  desired  to  take  the  deposition  of  a  corpora- 
tion before  trial  the  affidavit  must  state  the  names  of 
the  officers  or  directors  thereof,  or  any  of  them,  whose  testi- 
mony is  necessary  and  material,  or  the  books  and  papers,  as 
to  the  contents  of  which  an  examination  or  inspection  is  de- 
sired. And  the  order  to  be  made  in  respect  there  to  must 
direct  the  examination  of  such  persons,  and  the  production 
of  such  books  and  papers.3 

Evidence. — When  it  is  necessary  to  prove  the  incorpora- 
tion of  a  party  plaintiff  or  defendant,  it  is  enough  to  prove 
the  existence  of  a  corporation  dc  facto  without  proving  for- 
mal compliance  with  the  requirements  of  the  law  or  charter 
in  respect  to  perfecting  its  organization  if  the  opposing 
party  has  had  dealings  with  it  in  its  corporate  name.4 

The  statutes  generally  provide  that  a  certified  copy 
of  the  certificate  of  organization  of  a  domestic  corpora- 
shall  be  prima  facie  evidence  of  its  existence  as  such.  In 
regard  to  corporations  organized  under  the  laws  of  any 
other  state,  territory,  or  the  Dominion  of  Canada,  a  copy  of 
the  certificate  of  organization  or  incorporation,  or  any  other 
certificate  certified  or  exemplified  by  any  officer  or  officers 
in  such  state  or  territory  or  dominion,  is  prima  facie  evi- 
dence of  the  due  formation,  creation,  existence,  organiza- 
tion, or  capacity,  of  any  such  corporation  or  of  a  corporation 

1  Code  Civ.  Proc,  §  86S.  "  Bank  of  Keokuk  v.  Pfeiffer,  10S 

■  Id.  §  S69.  N.  Y.  272. 

s  Id.  S72.  subdv.  7. 


LEGAL   ACTIONS  AND    PROCEEDINGS.  249 

claiming  so  to  be,  and  such  certificate  duly  exemplified, 
or  a  duly  exemplified    copy   thereof,  will    be    received  in 

all  actions  and  proceedings  in  this  state,  in  or  before  all 
courts  and  officers,  with  the  same  force  and  effect,  in  all 
respects,  as  such  prima  facie  evidence,  as  in  such  other 
state,  territory  or  dominion.'  Courts  will  take  judicial  notice 
of  the  usages  of  business  of  certain  corporations,  such  as 
railroads,  telegraph  companies,  banks,  etc." 

It  is  held  in  this  state  that  the  by-laws  of  a  corporation 
are  admissible  in  evidence  for  the  purpose  of  showing  the 
power  of  its  officers,  and  that  it  is  immaterial  whether  the 
opposing  party  has  had  actual  notice  of  such  by-laws,  as 
every  one  dealing  with  the  corporation  is  chargeable  with  no- 
tice of  the  purpose  for  which  it  was  formed,  and  is  bound  to 
know  the  powers  and  extent  of  the  authority  of  its  agents.3 

Where  a  party  wishes  to  prove  an  act  or  transaction  of  a 
foreign  corporation  the  book  or  books  of  the  corporation 
may  be  used  for  that  purpose  as  presumptive  evidence, 
whether  any  or  all  of  the  parties  are  or  are  not  members  of 
the  corporation.'  If  an  original  book  is  not  produced  at 
the  trial  a  copy  thereof  or  an  entry  therein  may  be  used 
with  like  effect  as  the  original,  providing  that  the  party  in- 
tending to  use  the  copy  gives  the  adverse  party  at  least  ten 
days'  notice  of  its  intention,  specifying  briefly  the  nature  of 
the  evidence  proposed  to  be  given;  but  this  does  not  apply 
where  the  foreign  corporation  is  a  part}'  to  the  action  and 
seeks  to  prove  its  own  act  or  transaction  in  its  own  behalf." 
The  copy  must  be  verified  by  the  deposition  taken  as  pre- 
scribed by  law,  or  the  oral  testimony,  taken  at  the  trial,  of 
the  person  who  made  it,  or  of  a  person  who  has  examined 
it  and  compared  it  with  the  original  book,  or  the  entry 
therein.     The  witness  must  testify  that  the  copy  produced 

1  Laws  of  1877,  chap.  311,  s'  1.  39;  aff'd,  46  N.  Y.  6S1 ;  De  Bost  v. 

'-'  Eaton,   Cole   d~  Burnkam    Co.  v.  Albert  Palmer  Co. ,35  Hun,3S6;  Alex- 

Arerv,  S3  N.  Y.  31  ;   Mere /units''  A', it.  under  v.   Cauldwell,  S3  X.   Y.  4S0. 
Bunk  v.  Hall,  id.  33S;  Isaacson  v.  N.  4  Code  Civ.  I'mc,  £  929. 

)'.  C.  &  If.  A'.  A\  A'.  Co.,  94  id.  27S.  '-  Id.  £  930. 

3  Dabneyv.  Stephens,io  Abb.  N.  S. 


250  THE   LAW    OF   CORPORATIONS. 

is  correct;  that  he  made  it  or  compared  it  with  the  original ; 
and  that  he  then  knew  that  the  original  book  so  copied  or 
containing  the  entry  was  the  book  of  the  corporation;  or 
that  it  was  then  acknowledged  to  him  to  be  such  by  an  offi- 
cer or  receiver  of  the  corporation,  or  a  person  having  the 
custody  thereof,  naming  the  person  who  made  the  acknowl- 
edgment; and  he  must  specify  where  and  in  whose  custody 
the  original  was  then  kept.1 

The  admission  of  a  member  of  an  aggregate  corporation 
who- is  not  a  party  will  not  be  received  as  evidence  against 
the  corporation  unless  it  was  made  concerning,  and  while 
engaged  in,  a  transaction  in  which  he  was  the  authorized 
agent  of  the  corporation.2 

The  declarations  of  an  officer  of  a  corporation  which  is  a 
party  to  an  action  are  not  admissible  as  evidence  to  bind  the 
corporation  without  proof  that  the  officer  was  authorized  to 
make  such  declarations.  Evidence  simply  that  he  was  an 
officer  of  the  corporation  is  not  sufficient.3 

Provisional  Remedies.  Attachments. — A  warrant  of  attach- 
ment in  a  proper  case  may  be  granted  where  the  defendant 
is  a  foreign  corporation  or  if  a  domestic  corporation,  when 
it  has  removed  or  is  about  to  remove  property  from  the 
state  with  intent  to  defraud  its  creditors,  or  has  assigned, 
disposed  of,  or  secreted,  or  is  about  to  assign,  dispose  of,  or 
secrete,  property  with  a  like  intent.4 

Under  a  warrant  of  attachment  against  a  foreign  corpora- 
tion, other  than  a  corporation  created  by  or  under  the  laws 
of  the  United  States,  the  sheriff  may  levy  upon  the  sum  re- 
maining unpaid  upon  a  subscription  to  the  capital  stock  of 
the  corporation  made  by  a  person  within  the  county  ;  or 
upon  one  or  more  shares  of  stock  therein  held  by  such  a 
person,  or  transferred  by  him  for  the  purpose  of  avoiding 
payment  thereof." 

1  Code  Civ.  Proa,  §  931.  der  v.  Caitldwell,  S3  id.  480. 

-  Id.  §  S39.  4  Code  Civ.  Proc,  §  636. 

;  Niagara  Falls  Susp.   Bridge    Co.  5  Id.  §  646. 
v.  Backman,  66  N.  Y.  261;  Alexan- 


LEGAL   ACTIONS   AND    PROCEEDINGS.  25  r 

The  rights  or  shares  which  the  defendant  has  in  the  stock 
of  a  corporation  together  with  the  interests  and  profits 
thereon,  may  be  levied  upon,  and  the  sheriff's  certificate  of 
the  sale  thereof  entitles  the  purchaser  to  the  same  rights  and 
privileges  with  respect  thereto  which  the  defendant  had 
when  they  were  so  attached.' 

The  attachment  may  also  be  levied  upon  a  cause  of  ac- 
tion arising  upon  contract,  including  a  bond,  promissory 
note  or  other  instrument  for  the  payment  of  money  only, 
negotiable  or  otherwise,  whether  past  due,  or  yet  to  become 
due,  executed  by  a  foreign  or  domestic  corporation,  either 
within  or  without  the  state,  which  belongs  to  the  defendant 
and  is  found  within  the  county.  The  levy  of  the  attach- 
ment thereupon  is  deemed  a  levy  upon,  and  a  seizure  and 
attachment  of,  the  debt  represented  thereby." 

A  levy  under  a  warrant  of  attachment  made  upon  a 
right  or  share  in  the  stock  of  a  corporation,  or  interest  or 
profits  thereon,  must  be  made  by  leaving  a  certified  copy  of 
the  warrant  and  a  notice  showing  the  property  attached, 
with  the  president,  or  other  head  of  the  corporation,  or  the 
secretary,  cashier,  or  managing  agent  thereof.3 

Upon  the  application  of  a  sheriff  holding  a  warrant  of  at- 
tachment, the  president  or  other  head  of  a  corporation,  or 
the  secretary,  cashier,  or  managing  agent  thereof,  must  fur- 
nish to  the  sheriff  a  certificate  under  his  hand  specifying  the 
rights  or  number  of  shares  of  the  defendant  in  the  stock  of 
the  corporation  with  all  dividends  declared,  or  incumbrances 
thereon.4 

The  property  of  a  foreign  corporation  within  this  state 
is  liable  to  attachment  to  the  same  extent  as  is  the  property 
of  any  other  other  non-resident,  even  though  a  receiver  of 
such  corporation  had  previously  been  appointed  in  another 
state  ;  and  the  title  acquired  by  a  receiver,  subsequently  ap- 

1  Code  Civ.  Proa,  §  647.  3  Id.  £  649. 

*  Id.  §  648.  4  Id.  §  650. 


252  THE   LAW    OF   CORPORATIONS. 

pointed  here,  is  subject  to  any  lien  that  may  have  been  ac- 
quired by  an  attaching  creditor.1 

The  bonds  of  a  foreign  corporation  placed  in  the  hands 
of  an  agent  resident  in  this  state  for  purposes  of  sale  do  not 
acquire  any  validity  until  delivered  by  the  company,  or  with 
its  consent  and  such  property  is  not  liable  to  seizure  under 
attachment  against  the  corporation.2  Nor  can  shares  owned 
by  a  non-resident  in  the  stock  of  a  foreign  corporation  be 
reached  and  levied  upon  by  virtue  of  an  attachment,  al- 
though the  officers  of  the  corporation  are  within  the  state, 
engaged  in  carrying  on  the  corporate  business  here.  In  such 
a  case  the  stock  is  regarded  as  being  present  for  the  purpose 
of  judicial  proceedings  only  at  the  place  of  residence  of  the 
owner,  or  of  the  corporation,  and  where  an  attempt  has 
been  made  to  levy  upon  such  shares,  by  leaving  a  certified 
copy  of  the  attachment  with  the  secretary  of  the  corpora- 
tion, the  non-resident  defendant  may  move  to  have  the  levy 
set  aside  and  vacated.3 

National  banks  form  an  exception  to  the  class  of  foreign 
corporations  whose  property  may  be  attached.  It  has  been 
held  in  a  recent  case,  following  the  decision  of  the  Supreme 
Court  of  the  United  States,  that  property  of  a  national 
bank,  whose  domicile  was  in  another  state,  cannot  be  at- 
tached in  this  state." 

Injunction. — A  corporation  may  be  restrained  by  an  in- 
junction in  the  same  manner  and  to  the  same  extent  as  nat- 
ural persons;6  and   in  an  action  brought  by  the  attorney- 

1  Dzinlopv.  Patterson  Fire  Ins.  Co..  Nat.  Bank,  I  N.  Y.  Supp.  852;  affd. 

12  Hun,  627;    affd,   74   N.    Y.    145;  H2  N.  Y.  667,  following PacificNat. 

Hibernia  Nat.   Bank  v.   Laeombe,  84  Bank  v.  Mixter,  124   U.  S,    721,  and 

N.  Y.  367;   Woerishofferw  North  Riv-  overruling  Robinson  v.  Nat.  Bank  of 

er  Construction  Co.,  99  id.  398,  affg,  Newbeme,  81  N.  Y,,   385.     See  also 

S.  C.,  7  Civ.  Pro.  Rep.  113.  Nat.    Shoe  6f  Leather  Bank   v.    Me- 

a  Coddington    v.  Gilbert,   17  N.  Y.  chanics'  Nat.  Bank,  S9  id.  440.  and 

489.  Raynor   v.  Pacific  Nai.  Bank,  93  id. 


Plimpton  v.   Bigelow,    93   N.  Y.        371. 


592 


Mayor,  etc.,  v.  AT.   Y.   Cr=   Siaten 


4  Bank    of    Montreal    v.     Fidelity       Island  Ferry  Co.,  64  N.  Y.  622. 


LEGAL   ACTIONS   AND    PROCEEDINGS.  253 

general  to  restrain  persons  from  acting  as  a  corporation 
within  the  state,  without  being  duly  incorporated,  or  from 
exercising  any  corporate  rights,  privileges  or  franchises  not 
granted  to  them  by  the  laws  of  the  state,  an  injunction  may 
be  granted.1 

Among  the  cases  in  which  an  injunction  against  a  corpo- 
ration has  been  issued,  it  has  been  held  that  a  corporation 
might  be  restrained  from  completing  an  unlawful  sale  of  all 
its  property;2  from  the  payment  of  an  unearned  dividend  ;' 
from  issuing  bonds  as  part  of  a  fraudulent  design  to  increase 
stock,  and  from  converting  the  bonds  so  issued  into  stock4 
from  effecting  a  consolidation  with  another  corporation  ; & 
and  in  one  case  where  it  was  shown  that  the  cost  of  building 
branch  lines  and  bridges  would  amount  to  a  very  large  sum 
and  without  immediate  or  future  advantage  to  the  company 
an  injunction  was  issued  to  restrain  such  acts.0 

An  injunction  may  issue  in  an  action  brought  for  the 
dissolution  of  a  corporation,  to  restrain  the  corporation  and 
its  officers  from  collecting  and  receiving,  or  paying  out  any 
of  the  money  or  property  or  effects  of  the  corporation  dur- 
ing the  pendency  of  the  action;7  or  in  an  action  by  the 
people  brought  by  the  attorney-general  to  annul  a  corpora- 
tion ;fi  and  such  injunction  may  restrain  creditors  of  the  cor- 
poration from  bringing  actions  against  the  defendant  or 
from  taking  any  further  proceedings  in  actions  previously 
commenced.9 

An  injunction  order  suspending  the  general  and  ordinary 
business  of  a  corporation,  or  suspending  from  office  or 
restraining  from  the  performance  of  his  duties  a  trustee,  di- 
rector, or  other  officer  thereof,  can  be  granted  only  by  the 

1  Code  Civ.  Proc,  §  1955.  5  Blatchford  v.  Ross,  54  Barb.  42. 

2  Abbott  v.  American  Hard  Rubber  6  Ives  v.  Smith,  Sup.  Ct.,  Sp.  Term, 
Co.,  33  Barb.  578.                                          3  N.  Y.  Supp.  645. 

3  Carpenter  v.  New  York&  N.  H.  1  Code  Civ.  Proc,  §  17S7. 
R.  R.  Co.,  5  Abb.  Pr.  277.  8  Id.  §  1S02. 

4  Belmont  v.   Erie  Railway  Co.,  52  9  Id.  g  1S06. 
Barb.  637. 


2$4  THE   LAW    OF   CORPORATIONS. 

court,  upon  notice  of  the  application  therefor  to  the  proper 
officer  of  the  corporation  or  to  the  trustee,  director,  or  other 
officer  enjoined ;  if  such  an  injunction  order  is  made  other- 
wise than  is  thus  prescribed  it  is  void  ; '  and  this  is  so  even 
though  the  general  and  ordinary  business  of  the  corporation - 
be  illegal." 

Service  of  an  injunction  order  upon  a  corporation  may 
be  made  in  the  manner  prescribed  for  making  personal  ser- 
vice of  a  summons  upon  a  corporation.  Where  it  is  granted 
by  "the  court  it  must  be  served  by  delivering  a  certified  copy 
thereof;  where  it  is  granted  by  a  judge  it  must  be  served 
by  showing  the  original  order  and  delivering  a  copy  thereof.3 
A  director,  trustee,  or  other  officer  of  a  corporation  upon 
whom  a  notice  of  application  for  an  injunction  affecting  its 
property  or  business  is  served,  who  fails  to  disclose  to  the 
other  directors  or  officers  the  fact  of  such  service,  and  the 
time  and  place  of  such  application,  is  guilty  of  a  misde- 
meanor." 

Receivers. — A  receiver  of  the  property  of  a  corporation 
can  be  appointed  only  by  the  court  and  in  one  of  the  follow- 
ing cases : 

1.  In  an  action  brought  as  prescribed  in  Articles  II.,  III., 
and  IV.  of  Title  Second  of  Chapter  Fourteenth  of  the  Code 
for  the  supervision,  dissolution,  or  annulling  of  a  corpora- 
tion. 

2.  An  action  brought  for  the  foreclosure  of  a  mortgage 
upon  the  property  of  which  the  receiver  is  appointed,  where 
the  mortgage  debt  or  the  interest  thereupon  has  remained 
unpaid  at  least  thirty  days  after  it  was  payable,  and  after 
payment  thereof  was  duly  demanded  of  the  proper  officer 
of  the  corporation  ;  and  where  either  the  income  of  the 
property  is  specifically  mortgaged  or  the  property  itself  is 
probably  insufficient  to  pay  the  mortgage  debt. 

1  Code  Civ.  Proc,  §  1809.  "  Code  Civ.  Proc,  §  610. 

8  City  of  AT,  Y.v.S/arin.Super.  4  Penal  Code,  §  612. 

Ct. .General  Term.   2  N.Y.  Supp.  346. 


LEGAL   ACTIONS   AND    PROCEEDINGS.  255 

3.  An  action  Jarought  by  the  attorney-general  or  by  a 
stockholder  to  preserve  the  assets  of  a  corporation  having 
no  officer  empowered  to  hold  the  same. 

4.  A  special  proceeding  for  the  voluntary  dissolution  of 
a  corporation. 

Where  the  receiver  is  appointed  in  an  action,  otherwise 
than  by  or  pursuant  to  a  final  judgment,  notice  of  the  appli- 
cation for  his  appointment  must  be  given  to  the  proper 
officer  of  the  corporation.1 

In  an  action  brought  to  secure  the  dissolution  of  a  cor- 
poration, or  to  enforce  the  individual  liability  of  the  officers, 
a  receiver  may  be  appointed  at  any  stage  of  the  action." 

In  proceedings  for  the  voluntary  dissolution  of  a  corpora- 
tion, if  it  appears  to  the  satisfaction  of  the  court  that  the 
corporation  is  insolvent,  it  may,  on  motion  of  the  petitioners, 
on  notice  to  the  attorney-general,  or  on  motion  of  the  at- 
torney-general, on  notice  to  the  corporation,  appoint  a 
temporary  receiver  of  the  property.  The  court  may  also, 
in  its  discretion,  at  any  stage  of  the  proceedings,  grant  an 
injunction  restraining  the  creditors  of  the  corporation  from 
bringing  any  action  against  it,  or  from  taking  any  further 
proceedings  in  such  an  action  theretofor  commenced.3 

A  receiver  of  a  life  insurance  company  will  not  be  ap- 
pointed, if  such  company  has  actual  funds  invested  accord- 
ing to  law,  of  a  net  cash  value  equal  to  its  outstanding  lia- 
bilities and  the  required  reserve  on  policies  and  claims  not 
mature." 

Every  application  made  for  the  appointment  of  a  re- 
ceiver of  a  corporation  must  be  made  at  a  Special  Term  of 
a  court  held  in  and  for  the  judicial  district  in  which  the 
principal  business  office  of  the  corporation  was  located  at  the 

1  Code  Civ.  Proc,  §  1S10.  of  receivers  of  banks  (Laws  of  1SS2, 

■  Id.  §  17SS.  chap.  409,  §§  1 31-135).  are  omitted  as 

3  Id.  §  2423.  applicable  only  to  hanks  issuing  bills 

4  Laws  of   18S7,   chap.    32S.     Cer-  to  circulate  as  money  ;  ante,  p.  211. 
tain  provisions  as  to  the  appointment 


256  THE   LAW    OF   CORPORATIONS. 

commencement  of  the  action  wherein  such  receiver  is  ap- 
pointed, or  in  and  for  a  county  adjoining  such  district ;  and 
any  order  appointing  a  receiver  otherwise  made  is  void.1 
This,  however,  relates  only  to  statutory  receivers  appointed 
to  wind  up  corporations  and  distribute  their  assets,  and  not 
to  receivers  appointed  in  actions  for  the  foreclosure  of  a 
mortgage,  to  hold  the  property  and  receive  the  profits 
thereof  until  the  entry  of  a  final  judgment.  In  such  an 
action  the  order  appointing  the  receiver  may  be  made  in 
any  "county  where  the  action  may  be  tried.2 

A  copy  of  all  motions  and  all  motion  papers  and  a  copy 
of  any  other  application  to  the  court,  together  with  a  copy 
of  the  order  or  judgment  to  be  proposed  thereon  to  the 
court,  in  every  action  or  proceeding  for  the  dissolution  of  a 
corporation,  or  a  distribution  of  its  assets,  must  be  served 
on  the  attorney-general  in  the  same  manner  as  provided 
by  law  for  the  service  of  papers  on  attorneys  who  have  ap- 
peared in  actions,  whether  the  applications  would  but  for 
this  law  be  ex  parte,  or  upon  notice;  and  it  is  provided  that 
no  order  or  judgment  granted  shall  vary  in  any  material  re- 
spect from  the  relief  specified  in  such  copy  or  order,  unless 
the  attorney-general  appears  on  the  return  day  and  is 
heard  in  relation  thereto ;  and  any  order  or  judgment 
granted  in  such  an  action  or  proceeding  without  such  ser- 
vice of  papers  upon  the  attorney-general  is  void.3 

Where  the  application  is  brought  before  the  court  on  an 
order  to  show  cause,  a  copy  of  such  order  and  the  order 
proposed  to  be  entered  must  be  served  upon  the  attorney- 
general,  but  it  is  not  necessary  to  serve  upon  him  a  notice 
of  the  application  for  the  order  requiring  cause  to  be 
shown.4 

Unless  these  provisions   are   strictly  complied  with,   an 

1  Laws  of  1883,  chap.  378,  §  1.  3  Laws  of  1883,  chap.  378,  §  8. 

-  U.  S.  Trust  Co.  v.  N.  Y.  W.  S.  &>  4  Greason  v.  Goodwillie-  Wyman  Co. 

B.  R.  Co.,  101  N.Y.47S.  38  Hun,  138. 


LEGAL   ACTIONS   AND    PROCEEDINGS.  257 

order  appointing  a  receiver  of  a  corporation  in  such  a  case 
is  void  and  should  be  vacated.' 

Judgment  and  Execution. — If  defendant  is  a  foreign  corpora- 
tion, and  the  summons  was  served  without  the  state  or 
otherwise  than  personally,  in  case  of  default  in  pleading,  the 
court  must  require  the  plaintiff  or  his  agent  or  attorney  to 
be  examined  on  oath  respecting  any  payments  to  the  plain- 
tiff, or  to  any  one  for  his  use  on  account  of  his  demand  ;  and 
before  rendering  judgment,  the  court  may,  in  its  discretion, 
require  the  plaintiff  to  file  an  undertaking  to  abide  the  order 
of  the  court  touching  the  restitution  of  any  property  in  case 
the  defendant  or  its  representative  applies,  and  is  admitted 
to  defend  the  action  and  succeeds  in  its  defence.3  A  judg- 
ment will  not  be  rendered  for  a  sum  of  money  only  upon  an 
application  so  made,  except  in  an  action  in  which  an  attach- 
ment can  issue. 

Where  the  defendant  is  a  foreign  corporation  and  has 
not  appeared  in  such  an  action,  the  plaintiff,  in  the  applica- 
tion for  judgment,  must  procure  and  file  the  following 
papers  : 

1.  Proof  by  affidavit  that  a  warrant  of  attachment 
granted  in  the  action  has  been  levied  upon  property  of  the 
defendant. 

2.  A  description  of  the  property  so  attached,  verified 
by  affidavit,  with  a  statement  of  the  value  thereof  accord- 
ing to  the  inventory. 

3.  The  undertaking  referred  to  above,  if  one  has  been 
required.3 

Where  the  defendant  is  a  foreign  corporation,  and  has 
not  appeared  in  the  action,  and  the  summons  was  served 
without  the  state,  or  by  publication,  pursuant  to  an  order 
obtained  for  that  purpose,  the  judgment  can  be  enforced 
only  against  the   property  which   has  been   levied   upon  by 

1   Whitney   v.   JV.    Y.    &   Atlantic  2  Code  Civ.  Proc,  §  1216. 

R.  R.  Co.,  32  Hun,  164.  3  Id.  §  1217. 


258  THE    LAW    OF   CORPORATIONS. 

virtue  of  the  warrant  of  attachment  at  the  time  when  the 
judgment  is  entered  ;'  and  the  execution  must  require  the 
sheriff  to  satisfy  the  judgment  out  of  the  personal  property 
attached,  and  if  that  is  insufficient,  out  of  the  real  prop- 
erty attached.2 

A  corporation  cannot  be  examined  in  proceedings  sup- 
plemental to  execution  concerning  its  property  ;3  nor  can 
a  judgment  creditor  maintain  an  action  against  a  corpora- 
tion created  by  or  under  the  laws  of  this  state,  to  compel 
the  discovery  of  any  thing  in  action,  or  other  property  be- 
longing to  the  judgment  debtor.4  But  a  judgment  credi- 
tor may  maintain  an  action  against  a  domestic  corporation, 
to  procure  a  judgment  sequestrating  the  property  of  the 
corporation  and  providing  for  a  distribution  thereof.5 

Where  a  judgment  against  a  foreign  corporation  has 
been  obtained  upon  a  summons  served  otherwise  than  per- 
sonally, such  a  judgment,  being  founded  upon  an  attach" 
ment  of  its  property,  is  a  proceeding  in  rem  against  the 
property  attached,  and  is  not  a  judgment  upon  which  a 
judgment  creditor's  action  can  be  founded  ;6  but  where  a 
judgment  had  been  obtained  in  an  action,  after  personal 
service  of  the  summons,  or  appearance  by  the  corporation 
in  such  a  manner  as  to  confer  jurisdiction,  there  seems 
nothing  to  prevent  the  judgment  creditor,  after  execution 
has  been  returned  unsatisfied,  maintaining  an  action  against 
such  a  corporation  for  the  discovery  of  property  belonging 
to  it,  as  the  prohibition  contained  in  section  one  thousand 
eight  hundred  and  seventy-nine  of  the  Code  applies  only  to 
domestic  corporations  created  by  or  under  the  laws  of 
this  state. 

1  Code  Civ.  Proc,  §  707.  of  one  of    its  officers.     Id.  §£  2441 

2  Id.   §  1370.  and  2444. 

3  Id.  §2463.     This  does  not  apply  4  Id.  §  1879. 
however,   where   a   corporation    has  5  Id.  §  17S4. 

property  of  a  judgment  debtor.     In  6  Thomas   v.  Merchants'    Bank,    9 

such  a  case  it  may  be  examined  and       Paige,  216. 
compelled  to  answer  under  the  oath 


CHAPTER  IX. 
TAXATION. 

Art.    I.     Municipal    Taxation. 
Art.  II.     State    Taxation. 

With  but  few  exceptions '  the  property  of  domestic 
corporations  is  taxable  the  same  as  that  of  individuals  resi- 
dent in  the  state;2  and  it  is  no  reason  for  exemption, 
under  the  provision  of  the  Revised  Statutes  that  all  moneyed 
or  stock  corporations  deriving  an  income  or  profit  from  their 
capital  or  otherwise  shall  be  liable  to  taxation  on  their  capi- 
tal, that  the  income  of  such  a  corporation  is  not  equal  to  its 
expenditures.3 


Article    I. 

Municipal     Taxation. 

Real  Estate. — The  real  estate  of  allin  corporated  companies, 
liable  to  taxation,  is  assessable  in  the  town  or  ward  in  which 
it  is  situated,  in  the  same  manner  as  the  real  estate  of   indi- 


1  The  personal  property  of  gas- 
light companies  may  be  exempted 
from  taxation  for  a  period  not  ex- 
ceeding three  years  from  their  organ- 
ization (Laws  of  1S4S,  chap.  37,  5  i3, 
as  amended  by  Laws  of  1S71,  chap. 
g5);and  corporations  owning  vessels 
engaged  in  foreign  commerce,  all  of 
whose  vessels  are  employed  between 
foreign  ports  and  ports  of  the  United 
Stales,  are  exempted  from  all  taxa- 
tion in  this  state,  for  state  and  local 
purposes,  upon  their  capital  stock, 
franchises  and  earnings  for  the  period 


of  fifteen  years.    (Laws  of  1SS1,  chap. 
433-) 

A  corporation  organized  for  the 
purpose  of  furnishing  a  city  with 
water  does  not  thereby  become  a 
governmental  agency  and  thus  es- 
cape taxation.  People  ex  rel.  Mills 
Water   Works  Co.  v.   Forrest,  97  N. 

Y.  97.    • 

-  Rev.  Stat.,  part  1.  chap.  xiii. 
title  I,  §1. 

3  Id.  title  4.,  is  1;  People  ex  rel. 
Com.  Itis.  Co.  v.  Supervisors,  18 
Wend.  605. 

259 


260  THE    LAW    OF   CORPORATIONS. 

viduals.1  As  real  estate,  are  included  such  portions  of  tele- 
graph, telephone  or  electric  light  lines  as  lie  in  any  town  or 
ward  ; 2  and  the  lines  and  road-beds  of  railroads,3  including 
the  structures  of  elevated  railways  ; 4  and  the  road-bed  and 
railway  laid  upon  or  under  any  street ;  5  and  a  pier  ; 6  and  a 
toll-bridge  ; 7  and  structures  or  buildings  on  the  land  of 
another.6 

Personal  Property.— The  personal  property  of  a  corporation 
is  construed  to  include  such  portion  of  the  capital  of  com- 
panies, liable  to  taxation  on  their  capital,  as  is  not  invested 
in  real  estate." 

This  is  assessable  in  the  town  or  ward  where  the  principal 
office  or  place  for  transacting  the  financial  concerns  of  the 
company  is  located  ;  or  if  such  company  have  no  principal 
office  or  place  for  transacting  its  financial  concerns,  then  in 
the  town  or  ward  where  the  operations  of  such  company  are 
carried  on.  l0 

This,  however,  does  not  apply  to  the  personal  property 
of  fire  and  marine  insurance  companies.  These  are  exempt 
from  all  assessment  or  taxation  except  the  tax  payable  to 
the  state.11 

For  the  purposes  of  taxation,  the  designation  in  a  certi- 
ficate of  incorporation  of  the  place  in  which  the  principal 
office  is  located  is  conclusive  as  to  the  location  in  which  the 
personal  property  of  the  corporation  can  be  taxed  ;  and  this 
is  probably  true,  even  where  its  principal  office   is  located, 

1  Rev.    Stat.,    part    I.    chap.     xiii.  B   Smith  v.  The  Mayor,  6S   N.    Y. 

title    2,    §  6;    Hudson    River   Bridge  552. 

Co.  v.  Patterson,  74  N.  Y.  365.  7  Hudson  River  Bridge  Co.  v.  Pat- 

'2  Laws  of  1886,  chap.  659,  §  1.  terson,  74  N.  Y.  365. 

3  People  ex  rel.  Dunkirk,  etc.,  R. R.  s  People  ex  rel.  Van  Nest  v. 
Co.  v.  Cassity,  46  N.  Y.  46;  Buffalo,  Commrs.,  So  N.  Y.  573  ;  People  ex 
etc.,  R.  R.  Co.  v.  Supervisors ,  4S  id.  rel.  Midler  v.  Assessors,  93  id.  308. 
g3_  9  Rev.     Stat.,    part    1.    chap.   xiii. 

4  People   ex    rel.    N.    Y.     Elevated  title  1,  §  3. 

R.  R.  Co.  v.    Commrs.,  S2  \T.  Y.  459.  10  Id.  title  2,  §  6- 

5  People  ex  rel.   AT.    Y.    6r=  Harlem  n  Laws  of  1886,  chap.  679,  §  4. 
R.  R.  Co.  v.  Commrs.,  101  N.  Y.  322. 


TAXATION.  26l 

by  its  certificate,  with  a  view  to  avoid  taxation,  in  one  place, 
while  the  principal  business  of  the  company  is  carried  on  in 

another.1 

The  method  of  arriving  at  the  value  of  personal  property 
of  a  corporation  for  purposes  of  taxation,  is  to  ascertain  the 
actual  value  of  the  capital  stock,  whether  above  or  below 
par,  and  deduct  from  that  the  assessed  value  of  its  real  es- 
tate, and  all  shares  of  stock  in  other  corporations  which  are 
taxable  on  their  capital  under  the  laws  of  this  state,  actual- 
ly owned  by  such  company,  and  the  remainder  will  be  the 
personal  property  subject  to  taxation.2 

The  system  of  taxation  of  the  personal  property  of  cor- 
porations cannot  be  more  clearly  or  more  concisely  stated 
than  in  the  following  language  of  Judge  Earl,  in  the  case  of 
People  ex  rel.  Knickerbocker  Fire  Insurance  Co.  v.  Coleman.3 

He  there  says :  "  The  law  does  not  prescribe  how  the 
actual  value  of  the  capital  stock  of  a  corporation  is  to  be 
ascertained.  That  is  left  to  the  judgment  of  the  assessors, 
and  in  appraising  the  actual  value  they  have  a  right  to  re- 
sort to  all  the  tests  and  measures  of  value  which  men 
ordinarily  adopt  for  business  purposes  in  estimating  and 
measuring  values  of  property.  They  may  take  into  account 
the  business  of  the  corporation,  its  property,  the  value  of 
its  actual  assets,  the  amount  and  nature  of  its  present  and 
contingent  liabilities,  the  amount  of  its  dividends  and  the 
market  value  of  its  shares  of  stock  in  the  hands  of  individ- 
uals. They  may  resort  to  any  or  all  of  these  as  to  them 
seems  best,  and  they  are  not  confined  to  one  of  them.  They 
may  take  that  test  which  they  think  will  be  most  likely  to 
give  them  the  actual  value  of  the  stock,  and  they   may  dis- 

1  Western  Transportation  Co.  v.  P"pk  ex  rel.  Twenty-third  Street 
Scheu,  19  N.  Y.  40S  ;  Oswego  Starch  R-  R-  Co-  v-  Commrs.,  95  N.  Y.  554  I 
Factory  v.  Dolloway,  21  id.  449;  PeoPle  ex  reL  Pamv"a  R-  R~  Co- 
Union  Steamboat    Co.  v.  Buffalo,   S2  v-  Commrs..  104  id.  240. 

id.  351.  3  I0"  N.  Y-  541. 

2  Laws   of   1857,    chap.    456,    £  3; 


262  THE    LAW    OF    CORPORATIONS. 

regard  all  the  others.  They  are  not  bound  to  seek  for  all 
the  evidence  which  bears  upon  value  ;  that  would  be  im- 
practicable. The  law  commits  the  matter  to  their  judg- 
ment and  when  they  have  exercised  that,  it  is  subject  to  no 
review  or  correction  except  as  prescribed  by  law. 

"  One  mode  of  arriving  at  the  actual  value  of  the  capital 
stock  of  a  corporation    is  to   take  what    is  sometimes  called 
the  book  value,  which  is  reached  by  estimating  all  the  assets 
as  they  appear  upon  the  corporate  books,  and  deducting  all 
the  liabilities  and  other  matters  required  to  be  deducted  by 
law,  and  taking  the  balance  as  the  measure   of  value  for  as- 
sessment.    This  seems   to  be  a   proper  method    for  arriving 
at  the  value  of  the  capital  stock  in  the  case  of  a  corporation 
which  is  about  to  discontinue  business,  wind   up  its  affairs 
and    distribute  its  assets   among   its   shareholders.     But    it 
cannot  always,  or  usually,  be  a  fair  or  correct  method  of 
assessment  in  the  case  of  a  going  corporation  whose  assets 
are  to  remain  at  the  risk  of  its  business.     In  the  case  of  an 
insurance  company,  the    actual  value  of    its    capital    stock 
must  usually   be   less  than   the   book  value,  and   the   same 
must  frequently  be  true  of  other  corporations  which  are  en- 
gaged in  business  attended  with  many  hazards  and  fluctua- 
tions.    In  the  case  of  a  corporation  the  value  of  whose  capi- 
tal stock  is  largely  made  up  of  its  franchise,  good  will  and 
business  advantages,  the  book  value  of  its  capital  stock  will 
be  less  than  the  actual  value.      Hence  it  would  not  be  just 
for  assessors   always,   or  even   generally,  to  take  the   book 
value  of  the  capital  stock  of  going  corporations  as  the  meas- 
ure of  value  for  the  purpose  of  assessment. 

"  So  the  market  value  of  the  shares  of  capital  stock  may 
sometimes  be  above  and  sometimes  below  the  actual  value. 
Such  value  may  be  greatly  enhanced  or  depressed  for  spec- 
ulative purposes  without  any  change  in  the  actual  value. 
But  the  market  value  of  any  stock  which  is  listed  at  the 
stock  exchange  in  New  York,  and  largely  dealt  in  from  day 


TAXATION.  263 

to  day  for  a  series  of  months  will  usually  furnish  the  best 
measure  of  value  for  all  purposes.  The  competition  of 
sellers  and  buyers,  most  of  them  careful  and  vigilant  to  take 
account  of  everything;  affecting  value  of  stock  in  which  they 
deal,  and  each  mindful  of  his  own  interests,  and  seeking  for 
some  personal  gain  and  advantage,  will  almost  universally, 
if  time  sufficient  be  taken,  furnish  the  true  measure  of  the 
actual  value  of  stock.  But  there  is  no  law  which  compels 
assessors  to  resort  to  market  value  to  find  the  actual  value 
of  capital  stock.  That  standard  is  sometimes  illusory  and 
untrustworthy.  The  buyers  or  sellers  may  be  too  few  and 
the  transactions  not  sufficiently  numerous  to  furnish  a  real 
test  of  value." 

The  value  of  the  franchise  of  a  corporation  is  a  proper 
subject  of  estimation  and  forms  an  important  element  in 
determining  the  value  of  its  capital  stock.1 

The  indebtedness  of  a  corporation  should  be  considered 
in  estimating  the  value  of  the  stock,  but  when  that  value 
has  been  once  fixed,  the  indebtedness  will  not  then  be  de- 
ducted from  the  capital  in  order  to  ascertain  the  amount  of 
personal  property  subject  to  taxation.2 

Nor  does  it  follow  from  the  fact  that  the  whole  amount  of 
the  capital  of  a  company  was  expended  in  real  estate,  that 
that  there  is  no  personal  property  subject  to  taxation.  If 
the  actual  value  of  the  capital  stock  is  greater  than  the  as- 
sessable value  of  its  real  estate,  the  difference  between  these 
amounts  will  be  the  value  of  the  personal  property  to  be 
taxed.3 

Where  a  corporation  has  real  estate  situated  out  of  the 
state  the  amount  to  be  deducted  on  account  of  such  real 
estate  should  be  measured  by  its  actual  value, which  maybe 
based  upon  the  assessed  value  of  such  real  estate  where  it  is 

-  People  ex  rel.    Panama  P.  P.  Co.       Melting  Co.  v.  Asteti,  100  N.   Y.  597. 
v.  Commrs.,  104  N.  Y.  240.  8  Ibid. 

People  ex    rel.   Butchers'1   Hide  6° 


264  THE    LAW    OF   CORPORATIONS. 

located,  or,  in  the  absence  of  other  and  better  evidence,  the 
price  paid  for  it  may  be  taken  as  representing  such  value.' 

The  fact  that  the  capital  of  a  company,  organized  under 
the  laws  of  this  state,  is  represented  by  personal  property 
located  beyond  the  limits  of  the  state,  is  no  reason  for  its 
exemption  from  taxation." 

Where  a  corporation  owns  a  building  or  other  structure 
on  leased  land,  the  value  of  such  building  or  structure  only, 
and  not  that  of  the  land  upon  which  it  is  located,  is  assess- 
able as  real  estate  of  the  corporation,  to  be  deducted  from 
the  value  of  its  capital  stock  in  order  to  ascertain  its  per- 
sonal property  subject  to  taxation.3 

Statements  Required. — The  president,  cashier,  secretary, 
treasurer  or  other  proper  officer  of  every  moneyed  corpora- 
tion is  required,  on  or  before  the  first  day  of  July  in  each 
year,  to  make  and  deliver  to  the  assessors  of  the  town  or 
ward  in  which  such  company  is  liable  to  be  taxed  a  written 
statement  specifying  : 

1.  The  real  estate,  if  any,  owned  by  such  company,  the 
town  or  wards  in  which  the  same  is  situated,  and  the  sums 
actually  paid  therefor  ; 

2.  The  capital  stock  actually  paid  in  and  secured  to  be 
paid  in,  excepting  therefrom  the  sums  paid  for  real  estate, 
and  the  amount  of  such  capital  stock  held  by  the  state  and 
by  any  incorporated  literary  or  charitable  institution  ; 

3.  The  town  or  ward  in  which  the  principal  office  or 
place  of  transacting  the  financial  business  of  such  company 
is  situated  ;  or  if  there  be  no  such  principal  office,  the  town 
or  ward  in  which  its  operations  are  carried  on,  or  in  which 
it  is  liable  to  be  taxed.4     Such  statements   are   not   conclu- 

1  People  ex  rel.  Twenty-third  Street  541  ;  People  ex  rel.  Zulia  Steam  Nav. 

R.  R.  Co.  v.  Commrs.,  95  N-  Y.  554  ;  Co.  v  Commrs.,  51  Hun,  312. 

People  ex  rel.  Panama  R.  R.   Co.  v.  3  People    ex     rel.      Van     Nest    v. 

Commrs.,  104  id.  240  ;  Peoples*,  rel.  Commrs.,   So  N.   Y.    573  ;    People  ex 

Fairfield    Chemical   Co.  v.    Coleman,  rel.  Muller  v.  Assessors,  93  id.  30S. 

115  id.  178.  4  Rev.  Stat.,  parti,  chap.  xiii.  title 

s  People     ex      rel.      Pacific     Mail  4,  §  -• 
Steamship   Co.  v.  Commrs.,  64  N.  Y. 


TAXATION.  265 

sive  upon  the  assessors,  but  are  intended  simply  as  an  aid  to 
them  in  forming  their  judgment,  and  the  omission  to  fur- 
nish such  a  statement  will  not  relieve  a  company  from  tax- 
ation.1 

Foreign  Corporations. — Foreign  corporations  are  taxed  on 
all  sums  invested  in  any  manner  in  business  conducted  in 
this  state,  in  the  same  manner  that  the  personal  estate  of 
domestic  corporations  is  taxed.  The  assessment  must  be 
made  in  the  town  or  ward  where  the  principal  office  or  place 
of  business  of  such  a  company  is  located,  without  regard  to 
the  location  of  its  property.'"' 

Shares  of  Stock. — It  is  a  general  rule  that  the  owner  or 
holder  of  stock  in  any  incorporated  company  liable  to  taxa- 
tion on  its  capital  stock  shall  not  be  taxed  as  an  individual 
for  such  stock.3  And  the  same  rule  applies  to  shares  of 
stock  of  foreign  corporations,  as  the  presumption  is  that  such 
corporations  are  taxed  upon  their  capital  in  the  states  of 
their  domicile.4 

The  stockholders  of  banks,  however,  both  state  and 
national,  are  assessed  and  taxed  on  the  value  of  their  shares 
of  stock  in  the  city,  town  or  ward  where  such  bank  is  located, 
whether  such  stockholder  resides  in  that  place  or  not.' 

In  the  assessment  of  such  shares  each  stockholder  is 
allowed  all  the  deductions  and  exceptions  allowed  by  law  in 
assessing  the  value  of  other  taxable  personal  property  owned 
by  individual  citizens  of  this  state,  and  the  assessments  and 
taxations  cannot  be  at  a  greater  rate  than  is  made  or  as- 

1  Peopleexrel.  Manhattan  Fire  Ins.  3  Rev.  Stat.,  parti,  chap.  xiii.  title 
Co.  v.  Commrs.,    76   N.   Y.  64;  People       1,  §  7. 

ex   rel.    Mutual   Union    Tel.    Co.   v.  4  People    ex    re!.     Trowbridge     v. 

Commrs.,  99  id.  254.  Commrs.,  4  Hun.  595,  affd,  (>2  N.  Y. 

2  Laws  of  1S55,  chap.  37;  British       630. 

Com.    Life    Ins.    Co.    v.    Commrs  ,  1  5  Laws  of  18S2,  chap.  409,  Ji^  31S, 

Keyes,  303;    1  Abb.  App.   Dec.    199;  319;  Matter  of  Appln.  of  McMahon 

People     ex     rel.     Parker     Mills     v.  v.  Palmer,  102  N.  Y.  176;  Mercantile 

Commrs.,   23    N.    Y.    242;    People   ex  Natl.   Bank  v.    The    Mayor,   121   U. 

rel.  Bay  State  Shoe  and  Leather  Co.  v.  S.  138. 
McLean,  80  id.  254. 


266  THE    LAW    OF   CORPORATIONS. 

sessed  upon  other  moneyed  capital  in  the  hands  of  indi- 
vidual citizens  of  the  state.  There  must  also  be  deducted 
from  the  value  of  such  shares  the  same  proportion  of 
such  value  as  the  assessed  value  of  the  real  estate  of  the 
bank,  in  which  such  shares  are  held,  bears  to  the  whole 
amount  of  its  capital.1  The  assessors  must  ascertain  the 
value  of  such  shares,  taking  into  consideration  everything 
that  gives  them  value, — the  surplus,  and  the  circumstances 
of  the  bank,  its  franchises,  and  the  advantages  and  dis- 
advantages under  which  it  exists.2  They  must  then  deduct 
from  the  actual  value  of  each  share  a  sum  bearing  the  same 
proportion  to  such  value  as  the  assessed  value  of  the  real 
estate'of  the  bank  bears  to  the  actual  value  of  all  the  capital 
stock.3 

When  the  owner  of  stock  in  any  bank  does  not  reside  in 
the  place  where  the  bank  is  located  the  collector  and  county 
treasurer  respectively  have  the  same  power  as  to  collecting 
the  tax  to  be  assessed,  that  they  have  by  law  when  the  per- 
son assessed  has  removed  from  the  town,  ward,  or  county  in 
which  the  assessment  is  made  ;4  and  the  managing  officer 
or  officers  of  such  bank  must  retain  so  much  of  any  dividend 
or  dividends  belonging  to  such  stockholder  as  may  be  nec- 
essary to  pay  any  taxes  assessed  until  it  is  made  to  appear 
to  such  officers  that  they  have  been  paid.5 


Article  II. 

State  Taxation. 

In  1880  a  very  important  act  was  passed  providing  for 
a  tax  for  the  use  of  the  state  upon  certain  corporations, 
joint-stock  companies  and  associations.6     The  whole  act  was 

1  Laws  of  1882,  chap.  409,  §  312.  Batik  v.  Commrs.,  69  N.  Y.  91. 

3  People  ex  rel.  Gallatin  Natl.  Bank  4  Laws  of  1882,  chap.  409,  §  314. 

v.  Commrs.,  67  N.  Y.  516.  5  Id.  §  315. 

3  People  ex  rel.    Tradesmen' s  Natl.  6  Laws  of  1S80,  chap.  542. 


TAXATION.  267 

amended  in  1881,1  and  it  has  been  subjected  to  such  frequent 
and  radical  changes  since,  as  to  render  valueless  many  of 
the  decisions  construing  it. 

This  law  is  said,  in  one  of  the  cases  cited  below,  to  con- 
stitute a  new  system  for  collecting  from  these  corporations, 
which  come  within  its  provisions,  so  much  of  the  burdens 
laid  upon  them  as  inure  exclusively  to  the  use  of  the  state, 
by  a  tax  on  their  franchises  alone,  and  is  the  first  time,  in 
the  history  of  the  state  taxation  that  an  attempt  has  been 
made,  by  a  general  scheme,  to  impose  taxes  exclusively  upon 
the  franchises  and  business  of  corporations  organized  under 
its  laws,  and  it  exacts  their  payment  as  a  condition  of  the 
exercise  of  the  privileges  granted  them  by  the  state. 

Corporations  that  are  liable  to  taxation  under  its  pro- 
visions, are  exempt  from  all  other  assessment  and  taxation 
for  state  purposes,  except  upon  their  real  estate.  It  leaves 
them,  however,  subject  to  the  same  obligations,  so  far  as 
relates  to  local  taxation,  as  before.2 

Companies  Subject  to  the  Tax. — Every  corporation  organized 
pursuant  to  law  in  this  state,  or  in  any  other  state  or  country, 
and  doing  business  in  this  state,  except  only  savings  banks 
and  institutions  for  savings,  life-insurance  companies,  banks, 
foreign  insurance  companies,  manufacturing  or  mining  cor- 
porations, or  companies  wholly  engaged  in  carrying  on 
manufacture,  or  mining  ores  within  this  state,  and  agricul- 
tural and  horticultural  societies  or  associations,  which  ex- 
ceptions, however,  shall  not   include  gas  companies,  trust 

1  Laws  of  1S81.  chap.  361.  claratory  of  the  law  as  it  previously 

2  Laws  of  1SS0,  chap.  542,  §  8,  as  existed.  The  constitutionality  of 
amended  by  Laws  of  1SS1,  chap.  361;  this  law  has  been  sustained  in  nu- 
People  ex  rel.  Westchester  Fire  Ins.  merous  cases.  People  v.  Home  Ins. 
Co.  v.  Davenport,  91  N.  Y.  574;  Co.,g2U.Y.  328;  People  v.  Equitable 
People  v.  Home  Ins.  Co.,  92  id.  328.  Trust  Co.,  96  id.  3S7;  People  v.  The 
The  words  "for  state  purposes"  Gold  and  Stock  Tel.  Co.,  98  id.  67; 
were  added  to  section  eight  by  the  People  v.  Horn  Silver  Mining  Co., 
amendment   of    1881,    but   this    was  105  id.  76. 

held,  in  the  cases  cited,   simply  de- 


268  THE   LAW    OF   CORPORATIONS. 

companies,1  electric,  or  steam-heat,  lighting  and  power  com- 
panies, is  liable  to  a  tax  upon  its  franchise  or  business,  to  be 
paid  annually  into  the  city  treasury. 

If  the  dividend  or  dividends  made  or  declared  by  such 
corporation  during  any  year  ending  with  the  first  day  of 
November  amounts  to  six  or  more  than  six  per  cent  upon 
the  par  value  of  its  capital  stock,  then  the  tax  is  at  the  rate 
of  one-quarter  mill  upon  the  capital  stock  for  each  one  per 
cent,  of  dividends. 

If  no  dividend  has  been  made  or  declared,  or  if  the 
dividends  do  not  amount  to  six  per  cent,  upon  the  par  value 
of  its  capital  stock,  then  the  tax  is  at  the  rate  of  one  and 
a  half  mills  upon  each  dollar  of  the  valuation  of  the  capital 
stock. 

In  case  any  such  corporation  has  more  than  one  kind 
of  capital  stock,  as,  for  instance,  common  and  preferred 
stock,  and  upon  one  of  such  stocks  a  dividend  amounting 
to  six  or  more  than  six  per  cent,  upon  its  par  value  has 
been  made  or  declared,  and  upon  the  other  no  dividend  has 
been  made  or  declared,  or  if  made  amounts  to  less  than  six 
per  cent,  upon  its  par  value,  then  the  tax  is  at  the  rate  of  one- 
quarter  mill  for  each  one  per  cent,  dividend  made  or  de- 
clared upon  the  capital  stock  upon  which  the  dividends 
amount  to  six  or  more  per  cent.,  and  in  addition  thereto  a 
tax  at  the  rate  of  one  and  one-half  mills  upon  each  dollar  of 
the  valuation  of  the  capital  stock  upon  which  no  dividend 
was  declared,  or  upon  which  the  dividend  did  not  amount  to 
six  per  cent.2 

The  amount  of  capital  stock  taken  as  the  basis  for  the 
above  tax  is  the  amount  employed  within  this  state.3 

It  is  the  duty  of  the  treasurer  or  other  officer  having 
charge  of  any  corporation  upon  which  such  a  tax  is  imposed, 

1  As  to  trust  companies,  see  also  3  Id.  §  II,  added  by  Laws  of  1882, 
Laws  of  1882,  chap.  409,  §  324.  chap.  151,  and  as  amended  by  Laws 

2  Laws  of  1880,  chap.  542,  §  3,  as  of  1S85,  chap.  501. 
amended  by  Laws  of  18S9,  chap.  353. 


TAXATION.  269 

to  transmit  the  amount  of  such  tax  to  the  treasury  of  the 
state  within  fifteen  days  after  the  first  day  of  January  in 
each  year.1 

Determining  Valuation. — It  is  the  duty  of  the  president  or 
treasurer  of  every  such  company  to  report  in  writing  to  the 
comptroller  annually,  on  or  before  the  fifteenth  day  of  No- 
vember, stating  specifically  the  amount  of  capital  paid  in,  the 
date,  amount  and  rate  per  cent  of  each  and  every  dividend 
declared  during  the  year  ending  with  the  first  day  of  that 
month  ;  and  in  case  no  dividend  is  made  or  declared  upon 
either  the  common  or  preferred  stock  of  such  company  during 
the  year,  or  in  case  such  dividends  amount  to  less  than  six 
per  cent,  upon  the  par  value  of  its  stock,  the  treasurer  and 
secretary,  after  being  sworn  or  affirmed  to  perform  the  duty 
with  fidelity  according  to  the  best  of  their  knowledge  and  be- 
lief, must,  between  the  first  and  fifteenth  days  of  November, 
estimate  and  appraise  the  capital  stock  of  such  company  at 
its  actual  value  in  cash,  not  less,  however,  than  the  average 
price  which  such  stock  has  sold  for  during  the  year,  and 
they  must  forward  to  the  comptroller  a  certificate  thereof, 
accompanied  by  a  copy  of  their  oath  or  affirmation,  signed 
by  them  and  duly  attested. 

If  the  comptroller  is  not  satisfied  with  the  valuation  so 
made  and  returned,  he  may  make  a  valuation  himself,  and 
settle  an  account  upon  the  valuation  so  made  by  him  for  the 
taxes,  penalties  and  interest  due  to  the  state. 

Any  such  corporation  which  is  dissatisfied  with  the  ac- 
count so  settled  may,  within  ten  days,  appeal  therefrom  to 
a  board  consisting  of  the  secretary  of  state,  the  attorney-gen- 
eral and  state  treasurer,  which  board,  on  such  appeal,  may 
affirm  or  correct  the  account  so  stated  by  the  comptroller, 
and  the  decision  of  such  board  will  be  final.  Such  appeal  will 
not  stay  proceedings  unless  the  full  amount  of  the  taxes,  penal- 
ties and  interest  as  due  on  such  account,  settled  by  the  comp- 

1  Laws  of  18S0,  chap.  542,  §  4,  as  amended  by  Laws  of  1SS1,  chap.  361. 


270  THE   LAW   OF   CORPORATIONS. 

troller,  be  deposited  with  the  state  treasurer.1  In  making 
to  the  comptroller  such  report  or  certificate  of  estimation 
and  appraisal,  the  amount  of  capital  stock  employed  within 
this  state  must  be  stated  specifically,  and  the  comptroller 
may  ascertain,  fix  and  determine  the  amount  of  capital  so 
employed,  and  settle  an  account  for  the  taxes  and  penalties 
due  to  the  state  thereon.2 

Penalties. — If  such  officers  neglect  or  refuse  to  furnish  the 
comptroller  with  such  report  at  the  time  required,  or  if  the 
certificate  of  appraisement  and  oath,  or  affirmation,  as  the 
case  may  be,  or  to  pay  the  tax  imposed  on  such  corporation 
within  fifteen  days  after  the  first  of  January,  it  is  the  duty 
of  the  comptroller  to  add  ten  per  cent,  to  the  tax  of  such 
corporation  for  each  and  every  year  for  which  such  report 
or  certificate  was  not  furnished,  and  for  which  such  tax  has 
not  been  paid.  This  percentage  will  be  assessed  and  col- 
lected with  the  tax  in  the  usual  manner  of  assessing  and 
collecting  such  taxes. 

If  such  officers  intentionally  fail  to  comply  with  the  above 
provisions  for  one  year  it  is  the  duty  of  the  comptroller  to 
report  the  fact  to  the  governor,  who,  if  satisfied  that  such 
failure  was  intentional,  will  thereupon  direct  the  attorney- 
o-eneral  to  take  proceedings  in  the  name  of  the  people  of  the 
state  to  declare  the  charter  or  privileges  of  such  corporation 
forfeited  and  at  an  end,  and  for  such  failure  duly  found  the 
charter  and  privileges  of  every  such  corporation  will  cease, 
end,  and  be  determined.3 

Construction  of  the  Act. — That  provision  of  the  act,  which 
excepts  manufacturing  corporations  from  the  tax,  is  not  lim- 
ited to  corporations  organized  under  the  Manufacturing  Act, 
but  includes  all  corporations  under  whatever  act  incorporated, 

1  Laws  of    18S0,    chap.    542,    §   r,       chap.  151.  and  as  amended  by  Laws 
as  amended  by  Laws  of  1881,  chap.       of  1SS5,  chap.  501. 

,5 j  3  Id.  §  2,  as  amended  by  Laws  of 

2  Id.  §  11,  added  by  Laws  of  18S2,        1SS1,  chap.  361. 


TAXATION.  271 

whose  chief  and  principal  business  is  the  manufacture  and 
sale  of  artificial  products.1 

On  the  other  hand,  a  corporation  is  not  exempt  from  the 
tax  simply  because  it  was  organized  under  the  Manufactur- 
ing Act,  and  it  was,  accordingly,  held  in  People  v.  Knicker- 
bocker Ice  Co'.1  that  a  corporation  formed  for  the  purpose  of 
collecting,  storing  and  preserving  ice,  of  preparing  it  for 
market,  of  transporting  it  and  of  vending  the  same,  and 
whose  business  was  confined  to  the  purposes  thus  expressed, 
was  not  a  manufacturing  corporation,  and  so  was  not  exempt 
from  the  tax  upon  its  franchise.  So  it  was  held,  in  another 
case,  that  a  company,  incorporated  for  the  purpose  of  "  con- 
structing, using  and  providing  one  or  more  dry  docks,  or 
wet  docks,  or  other  conveniences  and  structures  for  building, 
raising,  repairing  or  re-coppering  vessels  or  steamers  of  every 
description,"  was  not  a  "  manufacturing  corporation"  within 
the  meaning  of  this  law.3 

It  is  not  always  easy  to  determine  what  is  sufficient 
presence  within  the  state  to  bring  a  corporation  within  the 
law  as  a  company  "doing  business  in  this  state."  In  one 
case  where  a  company,  organized  under  the  laws  of  Utah, 
for  the  purpose  of  carrying  on  the  business  of  mining,  mined 
its  ore  in  that  territory,  which  was  manufactured  into  base 
bullion  and  then  was  shipped  to  New  York,  where  it  was 
refined  and  sold  and  the  proceeds  deposited,  some  portion 
being  loaned,  and  other  portions  paid  out  for  the  company's 
purposes  in  that  city,  and  its  president,  secretary  and  treas- 
urer had  their  offices  in  New  York,  and  the  directors  held 
their  annual  meetings  there  ;  it  was  held  that  such  a  sub- 
stantial part  of  the  regular  business  of  the  corporation  was 

1  Nassau    Gas-Light   Co.  v.  City  of  the  exemptions  of  other  manufactur- 

Brooklyn,  89   N.  Y.  409.     So  far  as  ing  companies;  but  the  principles  of 

gas  light  companies    are  concerned,  the  decision  are  not  affected, 

this  case  is  overruled  by  amendments  a  99  N.  Y.  1S1. 

to  section  three  of  the  act  which  ex-  ;  People  v.  X.  }'.  Floating  Dry- Dock 

pressly  exclude  gas  companies  from  Co.,  92  N.  Y.  487. 


2/2  THE    LAW    OF   CORPORATIONS. 

carried  on  within  the  state  as  to  bring  it  within  the  provisions 
of  the  act.1 

In  the  case  of  People  v.  The  American  Bell  Telephone 
Co.;  it  was  held  that  that  corporation  which  was  organized 
under  the  laws  of  Massachusetts  and  engaged  in  manufactur- 
ing telephones  under  its  patents  and  licensing  their  use  by 
others,  and  which  leased  its  instruments  and  licensed  their 
use  in  New  York  to  local  corporations,  and  which  had  no 
office  in  New  York  other  than  such  local  companies,  and 
received  from  them  as  compensation  for  the  use  of  such 
instruments,  at  its  office  in  Boston,  a  royalty  payable  monthly, 
was  not  "  doing  business  in  this  state"  within  the  meaning 
of  this  law. 

Insurance  Companies.— It  is  the  duty  of  the  president,  sec- 
retary or  other  proper  officer  of  insurance  companies,  organ- 
ized under  any  law  of  this  state,  with  the  exception  of  life 
insurance  companies  and  fire  and  marine  insurance  compa- 
nies organized  under  the  laws  of  this  state  or  of  foreign 
countries,3  to  make  a  report  in  writing  to  the  comptroller 
annually,  upon  the  first  day  of  August  in  each  year,  setting 
forth  the  entire  amount  of  premiums  received  on  business 
done  in  this  state  by  such  company  during  the  year  ending 
with  the  preceding  thirtieth  day  of  June,  whether  the  said 
premiums  were  in  money,  or  in  the  form  of  notes,  credits  or 
any  other  substitutes  for  money.  And  every  such  company 
must  pay  into  the  state  treasury,  upon  that  day,  a  tax  as  a 
tax  on  its  corporate  franchise  or  business,  at  the  rate  of 
eight-tenths  of  one  per  cent,  upon  the  gross  amount  of  such 
premiums. 

1  People   v.    Horn    Silver   Mining  mining    corporations,  or  companies 

Co.    105  N.  Y.  76.  wholly  engaged  in  carrying  on  manu- 

•  117  N.  Y.  241.     The  amendment  facturing,  or  mining  ores  within   the 

to  section  three  (Laws  of  1S89,  chap.  state,"  etc. 

353)  changes  the  phraseology  of  the  3  The  taxes  of   fire  and  marine  in- 

exception  of  "  manufacturing  or  min-  surance  companies  are  now  regulated 

ing  corporations,  carrying  on  manu-  by   Laws    of    1SS6,   chap.   679   (post 

facture    or    mining    ore    within    this  p.  27S). 
state"  to  that  of  "  manufacturing  or 


TAXATION.  273 

Every  such  company  organized  under  the  laws  of  any 
other  state  or  country,  must  pay  into  the  treasury  on  the 
first  day  of  August  in  each  year  a  tax  of  eight-tenths  of  one 
per  cent,  upon  their  gross  premiums  received  by  them,  upon 
business  transacted  in  this  state  during  the  year  ending  with 
the  preceding  thirtieth  day  of  June,  whether  such  premiums 
were  in  money,  or  in  the  form  of  notes,  credits,  or  any  other 
substitutes  for  money.  And  every  such  company,  or  the 
agents  and  officers  thereof,  in  this  state,  must  make  a  report 
in  writing  to  the  comptroller  annually,  upon  the  first  day  of 
August  in  each  year,  setting  forth  the  entire  amount  of 
premiums  received  during  such  period.  Such  reports  must 
be  made  under  oath  or  affirmation. 

It  is  the  duty  of  the  comptroller  of  the  state  to  add  ten 
per  cent,  to  the  account  of  any  company  which  neglects  or 
refuses  for  a  period  of  thirty  days  to  make  such  report,  or 
to  pay  into  the  state  treasury  such  tax.' 

Railway,  Express  and  Telegraph  Companies,  etc. — In  addition 
to  the  taxes  above  provided  for,  every  corporation  formed 
for  railway,  canal,  steamboat,  ferry,  express,  navigation  or 
transportation  purposes,  and  every  elevated  railway  com- 
pany and  every  other  corporation  organized  under  any  law 
of  this  state,  or  of  any  other  state,  or  country,  doing  busi- 
ness in  this  state,  and  renting,  operating  or  leasing  to  or 
from  another  corporation,  joint-stock  company  or  associa- 
tion, any  railroad,  canal,  steamboat,  ferry,  express,  naviga- 
tion, pipe  line,  or  transportation  route  or  line,  or  elevated 
railway  or  other  device  for  the  transportation  of  freight  or 
passengers,  or  in  any  way  engaged  in  the  business  of  trans- 
porting freights,  or  passengers,  and  every  telegraph  com- 
pany, or  telephone  company  incorporated  under  the  laws  of 
this  or  any  other  state,  and  doing  business  in  this  state,  and 
every  express  company  or  association,  palace-car  or  sleeping- 
car    company  or    association  doing  business  in   this    state, 

1  Laws  of  1SS0,  chap.  542,  §  5,  as  amended  by  Laws  of  1SS1,  chap.  361. 


274  TnE   LAW    OF   CORPORATIONS. 

must  pay  to  the  state  treasurer,  for  the  use  of  the  state,  as 
a  tax  upon  its  corporate  franchise  or  business  in  this  state, 
a  tax  at  the  rate  of  five-tenths  of  one  per  cent  upon  the 
gross  earnings  in  this  state,  of  such  corporation  or  company, 
or  association,  for  tolls,  transportation,  telegraph,  telephone, 
or  express  business  transacted  in  this  state.1  Such  tax  must 
be  paid  annually  on  the  first  day  of  August. 

It  is  the  duty  of  the  president,  secretary,  or  other 
proper  officer  of  such  corporations,  to  transmit  to  the  comp- 
troller, on  the  first  day  of  August  in  each  year,  a  statement, 
under  oath  or  affirmation,  of  the  amount  of  the  gross  earn- 
ings of  such  company,  derived  from  all  sources,  during  the 
year  ending  with  the  preceding  thirtieth  day  of  June,  to- 
gether with  the  amount  of  tax  imposed  thereon.  And  if 
any  such  corporation  neglects  or  refuses  for  a  period  of 
thirty  days  after  any  tax  imposed  as  above  becomes  due, 
to  make  returns  or  to  pay  the  same,  the  amount  thereof, 
with  the  addition  of  ten  per  cent,  will  be  collected  as  other 
taxes  are  recoverable  by  law  from  such  corporations.2 

Corporations  subject  to  the  provisions  of  this  act  are 
liable  for  the  tax,  although  the  company  has  been  in  exist- 
ence for  less  than  a  year.  The  burden  is  imposed  on 
account  of  the  future  business  of  such  company,  and  it  is 
not  limited  to  past  transactions.3 

The  tax  is  based  upon  the  business  of  such  a  corporation 
done  within  this  state,  and  not  upon  its  whole  capital.4  It 
was  accordingly  held  that  the  tax  upon  premiums  received 
in  the  business  of  a  company  referred  only  to  business  done 

1  Laws  of   1SS0,   chap.  542,  §  6,  as  Horn    Silver  Mining  Co.  (105  N.  Y. 
amended  by  Laws  of  1S81 ,  chap.  361.  76), in  which  it  was  held  that  a  foreign 

2  Id.  §  7,  as  amended  by  Laws  of  mining  company  doing  business    in 
1SS1,  chap.  361.  this  state  was  liable  to  the  tax  upon 

3  People  v.  Spring  Valley  Hydraulic  its  whole  capital,    was  prior    to    the 
Gold  Co.,  92  N.  Y.  3S3.  amendment  of  1SS5,  which  limits  the 

4  People  v.  Equitable   Trust  Co.,  96  tax  to  "capital  stock  employed  with- 
N.  V.  3S7.     The   case   of  People   v.  in  this  state." 


TAXATION.  275 

within  the  state.1  And  a  telephone  company  is  not  liable 
to  taxation  on  its  whole  capital  stock,  because  it  is  a  stock- 
holder in  local  corporations  doing  business  here.2 

The  amount  of  dividends  made  or  declared  during  the 
year  are  the  measure  of  the  annual  value  of  the  franchises 
upon  which  the  tax  is  to  be  paid.  If  a  corporation  earning 
more  than  six  per  cent,  should  withhold  its  dividends  and  pay 
less  than  that  amount,  and  accumulate  its  earnings  to  in- 
crease the  value  of  its  capital,  it  would  not  thereby  escape 
taxation,  for  it  would  then  be  taxable  according  to  the  actual 
value  of  its  capital  stock,  and  that  value  would  be  increased 
by  the  amount  of  surplus  thus  accumulated.  But  if,  for 
the  purpose  of  evading  the  taxes,  it  should  divide  less  than 
its  actual  earnings  in  any  one  year,  and  thus  create  a  sur- 
plus, which  it  subsequently  divided,  such  dividend  would  be 
the  statutory  measure  of  the  value  of  the  franchises  which 
the  corporation  had  enjoyed  for  the  previous  year.3 

Penalties. — If  any  corporation  neglect  or  refuse  to  pay 
this  tax,  it  may  be  sued  for  in  the  name  of  the  people  of 
the  state,  and  recovered  in  any  court  of  competent  juris- 
diction, in  an  action  to  be  brought  by  the  attorney-general 
at  the  instance  of  the  comptroller.4  But  in  such  an  action 
no  interest  can  be  recovered  as  damages,  as  no  other  penalty 
for  default  in  payment  will  be  allowed  than  that  imposed 
by  the  statute.5 

If  any  corporation,  liable  to  make  reports  or  certificates 
of  estimate  and  appraisal  to  the  comptroller,  as  above  pro- 
vided, neglects  or  refuses  to  make  such  report  within  the 
time  prescribed,  or  makes  such  report  or  certificate  as  may 
be  unsatisfactory  to  the  comptroller,  the  latter  may  examine 
the  books  and  reports  of  such  company  and  fix  and  deter- 

1  People  v.  National  Fire  Ins.  Co.,  4  Laws  of  1S80,  chap.  542,  §  9,  as 

27  Hun,  iSS.  amended   by    Laws    of    1SS1,    chap. 

-  People  v.  American  Bell  Tel.. Co.,  361. 

117  N.  Y.  241.  5  People  v.  Gold  and  Stock  Tel.  Co., 

3  People  v.  Albany  Ins.  Co.,    92  N.  9S  N.  Y.  67. 
Y.  458. 


276  THE    LAW   OF   CORPORATIONS. 

mine  the  amount  of  tax  and  penalty  due  thereon,  either 
from  such  books  and  records,  or  from  any  other  data  in  his 
possession,  which  may  be  satisfactory  to  him.  And  he  may 
settle  an  account  for  such  tax  and  penalty,  together  with 
the  expenses  of  the  examination.1 

If  he  deem  it  necessary  to  examine  any  person  as  a  wit- 
ness upon  any  matter  relating  to  the  amount  of  capital 
stock  of  such  corporation,  or  to  use,  examine  or  inspect  any 
book,  account,  voucher  or  document  in  possession  of  any 
officer  of  such  corporation,  or  of  any  other  person,  or  under  his 
control,  relating  to  such  capital  stock  and  tax,  he  may  issue  a 
subpoena  commanding  such  person  to. appear  before  him  or 
some  person  designated  as  commissioner  by  an  appointment 
in  writing  filed  in  the  office  of  the  comptroller,  at  the  place 
where  the  principal  office  of  such  corporation  is  situated 
within  the  state,  and  at  the  time  specified  in  such  subpoena, 
to  be  examined  as  a  witness.  And  the  subpcena  may  con- 
tain a  clause  requiring  such  person  to  produce  on  such  ex- 
amination all  books,  papers  and  documents  in  his  possession, 
or  under  his  control,  relating  to  the  capital  stock  of  such 
corporation,  and  the  amount  thereof  employed  within  this 
state. 

The  comptroller  or  the  commissioner  so  designated  may 
administer  oaths  to  all  such  persons  and  examine  them  on 
oath  in  relation  to  any  matter  which  may  in  anywise  be 
material  in  determining  the  amount  of  tax  to  be  paid.  And 
any  person  neglecting  or  refusing  to  obey  such  subpcena, 
or  refusing  to  testify  or  to  answer  any  proper  or  pertinent 
question,  shall  be  deemed  in  contempt,  and  may,  upon  mo- 
tion of  the  comptroller  and  upon  application  to  a  justice  of 
the  Supreme  Court,  be  punished  therefor  for  contempt.2 

Accounts  settled  by  the  comptroller  bear  interest  from  a 

1  Laws    of  1SS1,    chap.   361,    §  12,  -  Id.  §  13,  added  by  Laws  of  1882, 

added  by  Laws   of  18S2,  chap.  151,  chap.  151,  and  as  amended  by  Laws 

and   as   amended  by   Laws  of  iSSs,  of  1SS5,  chap.  501. 
chap.  501. 


TAXATION.  2/7 

date  thirty  days  after  sending  notice  of  settlement  and  until 
full  payment  is  made.1  And  it  is  the  duty  of  the  comptrol- 
ler after  making  such  settlement  to  send  a  notice  thereof  to 
such  corporation.2 

No  writ  of  certiorari  to  review  the  decision  of  the  comp- 
troller will  be  granted  unless  application  is  made  within 
thirty  days  after  the  service  of  the  above  notice,  and  not 
then,  unless  the  papers  upon  which  the  motion  is  made,  in- 
cluding the  notice  of  motion,  have  been  served  upon  the 
comptroller  at  least  eight  days  before  such  motion,  nor  un- 
less the  corporation  applying  therefor  has  previously  depos- 
ited with  the  state  treasurer,  the  full  amount  of  taxes, 
penalties  and  charges  so  settled  and  adjusted  by  the  comp- 
troller, and  filed  with  him  an  undertaking  approved  by  one 
of  the  justices  of  the  Supreme  Court,  to  the  effect  that  if 
the  writ  is  vacated  and  the  determination  of  the  comptroller 
sustained,  the  applicant  will  make  payment  of  all  costs  and 
charges  which  may  accrue  against  it,  including  costs  on  all 
appeals.3 

If  an  appeal  has  been  taken,  or  if  no  deposit  has  been 
made  within  the  time  prescribed,  the  comptroller  may  issue 
his  warrant,  directed  to  the  sheriff  of  any  county  in  the  state, 
commanding  him  to  levy  upon  any  property  of  such  com- 
pany. And  such  warrant  will  be  a  lien  upon  and  bind  the 
personal  estate  of  such  corporation  from  the  time  an  actual 
levy  is  made.4 

The  comptroller  may,  at  anytime,  revise  and  readjust  any 
account  previously  settled,  whenever  it  may  appear  to  him 
that  such  tax  has  been  illegally  paid,  or  that  it  had  been 
so  made  as  to  include  taxes  which  could  not  have  been  law- 
fully demanded.'  And  such  re-settlement  may  be  reviewed 
both  upon  the  law  and    upon   the   facts   upon   certiorari  by 

1  Laws  of  1S81,  chap.  161,  £  15,   chap.  501. 

added  by  Laws  of  1885,  chap.  501.      J  Id.  §  iS,  added  by 'Laws  of  1S85, 

2  Id.  §  16,  added  by  Laws  of  18S5,   chap.  501 

chap.  501.  5  Id.  §  19,  added  by  Laws  of  1SS9, 

3  Id.  §  17,  added  by  Laws  of  1SS5,   chap.  463. 


278  THE   LAW   OF   CORPORATIONS. 

the  Supreme  Court,  at  the  instance  either  of  the  parties  mak- 
ing such  application,  or  of  the  attorney-general  in  the  name 
and  in  behalf  of   the  people  of  the  state.1 

Any  person  having  knowledge  of  the  evasion  of  taxation 
by  any  company  liable  thereto  may  report  such  fact  to  the 
comptroller  together  with  such  information  as  may  be  in  his 
possession  as  may  relate  to  the  recovery  of  such  taxes. 
And  whenever  in  the  opinion  of  the  attorney-general  or 
comptroller  the  interests  of  the  state  require  it,  either  of 
them  is  authorized  to  employ  the  person  reporting  such  in- 
•formation,  to  assist  in  the  collecting  and  preparing  of  evi- 
dence and  in  the  prosecution  and  trial  of  suits  for  such 
taxes,  and  may  agree  to  pay  such  person  for  such  services  a 
sum  not  exceeding  ten  per  cent,  of  the  amount  so  collected.2 

Fire  and  Marine  Insurance  Companies.- — Every  fire  and  ma- 
rine insurance  company,  incorporated  under  the  laws  of  this 
state,  or  incorporated  under  the  laws  of  any  foreign  country, 
and  doing  business  in  this  state,  is  required  on  or  before  the 
first  day  of  August  in  each  year  to  pay  to  the  treasurer  of 
the  state  a  tax  on  its  corporate  franchises  for  business  in 
this  state  a  sum  equal  to  one-half  of  one  per  cent,  upon  the 
gross  amount  of  premiums  received  by  such  company  dur- 
ing the  year  ending  the  preceding  thirtieth  day  of  June, 
on  business  done  in  this  state  by  such  company,  whether 
such  premiums  were  in  money,  or  in  the  form  of  notes, 
credits,  or  any  other  substitute  for  money:3  and  before  the 
time  of  such  payment  must  make  a  return  to  the  comptrol- 
ler signed  and  sworn  to  by  its  president,  secretary  or  man- 
ager, giving  the  total  amount  of  premiums  received  by  such 
company  during  the  year  so  ending.4  If  any  officer  of  any 
such  company  refuses  or  wilfully  neglects  to  make  and  ex- 
ecute  such   a  return  he  will   be   deemed  guilty  of  a  misde- 

1  Laws  of  iSSi,   chap.  361,   §    20,  3  Laws  of  1SS6,  chap.  679,    §  1. 
added  by  Laws  of  1889,  chap.  463.  4  Id.  §  2. 

2  Laws  of  i8S6,  chap.  266,  §  I. 


TAXATION.  279 

meanor,  and  if  he  makes  a  wilfully  false  statement  therein, 
will  be  subject  to  the  pains  and  penalties  of  perjury. 

All  taxes  not  paid  by  such  company  when  due,  may  be 
collected  by  actions  brought  in  the  Supreme  Court  in  the 
name  of  the  people  of  the  state  by  the  attorney-general, 
at  the  instance  of  the  comptroller,  and  in  such  action  the 
court  may  issue  an  injunction  restraining  the  further  prose- 
cution of  the  business  of  the  corporation  until  such  tax  to- 
gether with  interest  and  costs  are  paid,  and  until  the  return 
is  made.1 

The  real  estate  of  such  companies  is  still  liable  to  assess- 
ment and  taxation  where  situated  for  all  purposes  ;  but  the 
personal  property,  franchises  and  business  of  such  com- 
panies, incorporated  under  the  laws  of  this  state  or  of  any 
other  state  or  country,  and  doing  business  in  this  state,  and 
the  shares  of  stock  of  such  company  are  exempt  from  all  as- 
sessments or  taxation,  except  as  above  provided,  and  with 
the  exception  of  the  fire  department  tax  of  two  per  cent.2 

Banks Every  corporation  organized  under  the  laws  of 

any  other  state  or  country,  and  which  receives  deposits, 
loans  money,  sells  bills  of  exchange  or  issues  its  credit,  or  is 
in  any  other  manner  engaged  in  the  business  of  banking  in 
this  state,  is  required  annually  on  or  before  the  first  day  of 
February,  to  pay  to  the  comptroller  a  state  tax,  as  a  tax  on 
its  business  in  this  state,  at  the  rate  of  one-half  of  one  per 
cent,  on  the  average  of  all  sums  of  money  received  on  de- 
posit, and  of  all  sums  received  on  account  of  such  business, 
or  used  or  employed  in  such  business,  in  this  state  during 
the  year  ending  the  preceding  thirty-first  clay  of  December.3 

Ever)-  such  corporation  must  make  a  return  to  the  comp- 
troller in  writing,  on  or  before  the  first  day  of  February  in 
each  year,  setting  forth  the  amount  of  the  state  tax  to  and 

1  Laws  of  1SS6,  chap.  679,  §  3.  taxes  on  their  franchises  in   support 

3  Id.    §    4.      In    addition    to   these  of  the  fire  departments  in  the  sev- 

taxes,  however,  fire  insurance   com-  eral  towns  and  cities  of  the  state. 

panies  are   subject   to   certain    local  3  Laws  of  1SS2.  chap.  409,    ?  321, 


23o  THE   LAW    OF   CORPORATIONS. 

for  which  it  is  liable,  and  of  the  average  of  deposit  in,  and 
of  moneys  received  and  used  in  or  on  account  of  such  busi- 
ness in  this  state  respectively  on  which  such  tax  is  based. 
This  return  must  be  verified  by  oath  or  affirmation,  and  for 
any  neglect  or  failure  to  make  such  return,  or  to  pay  such 
tax,  a  penalty  of  ten  per  cent,  on  the  amount  of  the  tax  will 
be  imposed,  and  which  may  be  recovered,  together  with  the 
tax,  in  an  action  brought  in  the  name  of  the  people  in  any 
court  of  competent  jurisdiction,  by  the  attorney-general, 
at  the  instance  of  the  comptroller.1 

The  managers  or  agents  of  any  such  company  must  keep 
at  all  times  in  the  office  where  its  principal  business  is  trans- 
acted in  this  state  a  full  and  accurate  account  of  the  moneys 
used  or  employed  in  its  business  and  of  its  deposits,  which 
account  will  be  subject  to  the  inspection  of  the  comptroller 
or  of  any  clerk  designated  by  him  to  inspect  the  same 
during  the  business  hours  of  any  day  on  which  business  may 
be  legally  transacted.2 

Any  moneyed  or  stock  corporation  deriving  income  or 
profit  from  its  capital  must  add  to  the  dividends  declared 
upon  any  stock  owned  by  the  state  or  by  any  literary  or 
charitable  society  or  institution  a  sum  equal  to  the  assess- 
ment for  taxes  paid  upon  an  equal  amount  of  the  stock  of 
such  corporation  not  exempt  from  taxation  ; 9  and  the  pro- 
visions of  the  revised  statutes,  whereby  certain  stocks  are 
exempt  from  taxation,  are  for  the  benefit  of  the  state  or  the 
institutions  so  exempt,  and  not  for  the  benefit  of  such  cor- 
porations." 

1  Laws  of  1SS2,  chap.  409,  §  322,  as      of  1SS9,  chap.  12. 
amended  by  Laws  of  1SS9,  chap.  12.  3  Id.  §  325. 

"  Id.  §  323,  as  amended  by  Laws  4  Id.  £  326. 


CHAPTER   X. 

DISSOLUTION. 

Art.      I.  Voluntary  Dissolution. 
Art.     II.  Involuntary  Dissolution. 
Art.  III.  Receivers. 

There  is  no  general  power  in  a  court  of  equity  to  dis- 
solve a  corporation.  The  proceedings  are  wholly  statutory, 
and  must  be  conducted  in  strict  accordance  with  the  methods 
provided  by  law.1  Thus  although  the  abandonment  or  in- 
solvency  of  the  corporation  may  sometimes  work  a  practical 
dissolution,  yet  it  will  not  operate  as  a  legal  dissolution  ;' 
nor  will  a  resolution  of  the  directors  of  a  corporation  that  it 
be  dissolved  and  go  into  liquidation,  and  that  its  business 
cease  and  franchises  be  surrendered,  be  sufficient  to  consti- 
tute a  legal  dissolution  of  the  corporation.3 

Article  I. 

Voluntary  Dissolution. 

If  a  majority  of  the  directors,  trustees  or  other  officers 
having  the  management  of  the  concerns  of  a  corporation 
created  by  or  under  the  laws  of  this  state,  discover  that  its 
stock,  effects  and  other  property  are  not  sufficient  to  pay 
all  just  demands  for  which  it  is  liable,  or  to  afford  a  reason- 
ble  security  to  those  who  may  deal  with  it ;  or  if  for  any 
reason  they  deem  it  beneficial  to  the  interests  of  the  stock- 

i   Vcrplanck  v.  Mercantile  Ins.  Co.,  less  Paper,  etc.,  Co.,  7  Hun,  557. 
1  Edw.  ch.  84;    Denike  v.  N.    Y.  fir3  *  New  England  Iron   Co.  v.  Gilbert 
Rosendale   Lime  and  Cement   Co.,  So  El.  R.  Co.,  91  N.  Y.  153. 
N.  Y.  599;  U.  S.  Trust  Co.  v.  N.  Y.,  s  Lake  Ontario  Natl.  Bank  v.  On- 
West  Shore  and  B.   R.  Co.,   101  id.  ondaga  County  Bank,  7  Hun,  549. 
47S;   Chamberlain  v.  Rochester  Seam- 

281 


282  THE   LAW    OF   CORPORATIONS. 

holders  that  the  corporation  be  dissolved,  they  may  present 
a  petition  to  the  supreme  court,  or  to  a  superior  city  court 
of  the  city  where  the  principal  office  of  the  corporation  is 
located,  praying  for  a  final  order  dissolving  the  corporation.1 

If  a  corporation,  created  under  a  general  statute  of  the 
state  for  the  formation  of  corporations,  has  an  even  number 
of  trustees  or  directors  who  are  equally  divided  respecting 
the  management  of  its  affairs,  and  the  entire  stock  of  the 
corporation  at  that  time  is  owned  by  the  trustees  or  direc- 
tors, or  is  so  divided  that  one-half  is  owned  or  controlled  by 
persons  favoring  the  course  of  one-half  of  the  trustees  or 
directors,  and  one-half  by  persons  favoring  the  course  of  the 
other  half  of  them,  the  trustees  or  directors,  or  one  or  more 
of  them,  may  present  a  petition  to  the  court  for  its  dissolu- 
tion. This,  however,  does  not  apply  to  a  savings-bank,  a 
trust  company  and  safe-deposit  company,  or  a  corporation 
formed  to  rent  safes  in  burglar  and  fire  proof  vaults,  or  for 
the  construction  or  operation  of  a  railroad,  or  for  aiding  in 
the  construction  thereof,  or  for  carrying  on  the  business  of 
banking  or  insurance,  or  intended  to  derive  a  profit  from  the 
loan  or  use  of  money." 

Contents  of  the  Petition. — The  petition  must  show  that  the 
case  comes  within  one  or  the  other  of  the  provisions  above 
given,  and  must  state  the  reasons  which  induce  the  peti- 
tioner or  petitioners  to  desire  the  dissolution  of  the  corpora- 
tion. A  schedule  must  be  annexed  to  the  petition  contain- 
ing the  following  matters,  as  far  as  such  petitioners  know  or 
have  the  means  of  knowing  the  same  : 

i.  A  full  and  true  account  of  all  the  creditors  of  the 
corporation,  and  of  all  unsatisfied  engagements  entered  into 
by  and  subsisting  against  the  corporation. 

2.  A  statement  of  the  name  and  place  of  residence  of 
each  creditor,  and  of  each  person  with  whom  such  an  engage- 
ment was  made  and  to  whom  it  is  to  be  performed,  if  known  ; 
or  if  either  is  not  known,  a  statement  of  that  fact. 
1  Code  Civ.  Proc.  §  2419.  2  Id.  §  2420. 


DISSOLUTION.  283 

3.  A  statement  of  the  sum  owing  to  each  creditor  or 
other  persons  specified  in  the  last  subdivision,  and  the 
nature  of  eacli  debt,  demand  or  other  engagement. 

4.  A  statement  of  the  true  cause  and  consideration  of 
the  indebtedness  to  each  creditor. 

5.  A  full,  just  and  true  "inventory  of  all  the  property  of 
the  corporation,  and  of  all  the  books,  vouchers  and  securi- 
ties relating  thereto. 

6.  A  statement  of  each  encumbrance  upon  the  property 
of  the  corporation  by  judgment,  mortgage,  pledge  or  other- 
wise. 

7.  A  full,  just  and  true  account  of  the  capital  stock  of 
the  corporation,  specifying  the  name  of  each  stockholder, 
his  residence,  if  it  is  known,  or  if  it  is  not  known,  stating 
that  fact,  the  number  of  shares  belonging  to  him.  the 
amount  paid  in  upon  his  share,  and  the  amount  still  due 
thereupon.' 

An  affidavit  made  by  each  of  the  petitioners  to  the  effect 
that  the  matters  of  fact  stated  in  the  petition  and  the  sched- 
ule are  just  and  true  so  far  as  the  affiant  knows,  or  has  the 
means  of  knowing  the  same,  must  be  annexed  to  the  peti- 
tion and  schedule.2 

While  this  statute  will  be  strictly  construed,  and  no  in- 
tendment will  be  made  in  behalf  of  the  petitioners  beyond 
what  naturally  arises  from  the  contents  of  the  petition  and 
the  schedules,  yet  a  mere  technical  and  accidental  omission 
in  the  inventory  of  some  item  of  property,  or  of  some  book 
relating  to  property,  showing  no  lack  of  good  faith,  or  evi- 
dence of  a  fraudulent  purpose,  will  not  defeat  the  proceed- 
ing, but  can  be  cured  by  evidence  at  the  hearing  before  the 
referee.3 

The  petition  must  show  that  the  dissolution  would  be 
beneficial  to  the  interests  of  the  stockholders,  and  a  petition 

1  Code  Civ.  Proc.  ?  2421.  Mining   Co.,  4  N*.  Y.   Supp.    174;  51 

2  Id.  ^  2422.  Hun,  640. 
;  Matter  of  Santa  Eulalia    Silver 


284  THE   LAW   OF   CORPORATIONS. 

which  fails  to  set  forth  such  facts  is  not  sufficient  to  warrant 
a  court  in  granting  it.1  Where  it  is  addressed  to  the  su- 
preme court,  the  papers  must  be  presented  at  a  term  of  that 
court  held  within  the  judicial  district  embracing  the  county 
where  the  principal  office  of  the  corporation  is  located. 

Proceedings  upon  Application. — Where  a  corporation,  created 
under  a  general  statute,  has  an  even  number  of  trustees  or 
directors,  who  are  equally  divided  respecting  the  manage- 
ment of  its  affairs,  and  one-half  of  the  stock  is  owned  by 
those  who  are  in  favor  of  dissolution  and  one-half  by 
those  who  are  opposed,  the  court  may,  in  its  discretion,  en- 
tertain or  dismiss  the  application.  If  the  court  entertains 
the  application,  in  such  a  case,  or  if  a  majority  of  the  stock 
holders  deem  it  beneficial  to  the  interests  of  the  stock- 
holders that  the  corporation  should  be  dissolved,  it  may 
make  an  order  requiring  all  persons  interested  in  the  cor- 
poration to  show  cause  before  it,  or  before  a  referee  des- 
ignated in  the  order,  at  a  time  and  place  therein  specified, 
not  less  than  three  months  after  the  granting  of  the  order, 
why  the  corporation  should  not  be  dissolved.  The  order 
must  be  entered  and  the  papers  must  be  filed  within  ten 
days  after  the  order  is  made  with  the  clerk  of  the  court,  or 
in  the  Supreme  Court,  with  the  clerk  of  the  county  where 
the  principal  office  of  the  corporation  is  located. 

If  it  is  made  to  appear  to  the  satisfaction  of  the 
court  that  the  corporation  is  insolvent,  the  court  may,  at  any 
stage  of  the  proceedings,  before  final  order  on  motion  of 
the  petitioners  on  notice  to  the  attorney-general,  or  on 
motion  of  the  attorney-general  on  notice  to  the  corpora- 
tion, appoint  a  temporary  receiver  of  the  property  of  the 
corporation,  who  will  have  all  the  powers  and  be  subject  to 
all  the  duties  of  receivers  appointed  in  an  action  for  the  dis- 
solution of  the  corporation,  brought  by  the  attorney-gen- 
eral, or  by  a  creditor  or  stockholder  as  prescribed  in  sec- 
tion seventeen  hundred  and  eighty-eight  of  the  Code. 
1  Matter  of  Pyrolusite  Manganese  Co.,  29  Hun,  429. 


DISSOLUTION.  285 

The  court  may  also,  in  its  discretion,  at  any  stage  in  the 
proceeding,  after  such  appointment,  and  upon  like  motion 
and  notice,  confer  upon  such  temporary  receiver  the  powers 
and  authority,  and  subject  him  to  the  duties  and  liabilities 
of  a  permanent  receiver,  or  as  much  thereof  as  it  thinks 
proper,  except  that  he  shall  not  make  any  final  distribution 
among  the  creditors  and  stockholders  before  final  order  in 
the  proceedings,  unless  he  is  specially  directed  so  to  do 
by  the  court. 

If  such  receiver  be  appointed  the  court  may,  in  its  dis- 
cretion, on  like  motion  and  notice,  with  or  without  security, 
at  any  stage  of  the  proceeding  before  final  order,  grant 
an  injunction  restraining  the  creditors  of  the  corporation 
from  bringing  any  action  against  it  for  the  recovery  of  a  sum 
of  money,  or  from  taking  any  further  proceedings  in  such 
an  action  previously  commenced,  and  such  injunction  will 
have  the  same  effect  and  be  subject  to  the  same  provisions 
of  law  as  if  each  creditor,  upon  whom  it  is  served,  was 
named  therein.1 

A  copy  of  the  order  must  be  published,  as  prescribed 
therein,  at  least  once  in  each  of  the  three  weeks  immedi- 
ately preceding  the  time  fixed  therein  for  showing  cause 
in  the  newspapers  printed  in  Albany,  in  which  legal  notices 
are  required  to  be  published,  and  also  in  one  or  more  news- 
papers specified  in  the  order,  published  in  the  city  or  county 
wherein  the  order  is  entered.2 

A  copy  of  the  order  must  also  be  served  upon  each 
of  the  persons  specified  in  the  schedule  as  a  creditor  or 
stockholder  of  the  corporation,  or  as  a  person  to  whom 
an  engagement  of  the  corporation  is  to  be  performed, 
other  than  a  person  whose  residence  is  stated  to  be  unknown 
or  to  be  without  the  United  States.  Such  service  must 
be  made  either  personally  at  least  twenty  days  before 
the  time  appointed  for  the  hearing,  or  by  depositing  a  copy 
of  the  order  at  least  forty  days  before  the  time  so  ap- 
1  Code  Ciy.  Proc.  £  2423.  2  Id.  §  2424. 


286  THE   LAW   OF   CORPORATIONS. 

pointed,  in  the  post-office,  enclosed  in  a  post-paid  wrapper, 
addressed  to  the  person  to  be  served  at  his  residence  as 
stated  in  the  schedule.1 

At  the  time  and  place  specified  in  the  order,  or  at 
the  time  and  place  to  which  the  hearing  is  adjourned, 
the  court  or  the  referee  will  hear  the  allegations  and  proofs 
of  the  parties  and  determine  the  facts.  If  a  referee  was  not 
designated  in  the  order  to  show  cause,  the  court  may,  in  its 
discretion,  appoint  a  referee  when,  or  after,  the  order  is 
returnable. 

The  decision  of  the  court  or  the  report  of  the  referee 
must  be  in  writing,  and  must  be  made  and  filed  with  all  con- 
venient speed.  It  must  contain  .a  statement  of  the  effects, 
credits  and  other  property,  and  of  the  debts  and  other  en- 
gagements of  the  corporation,  and  of  all  other  matters  per- 
taining to  its  affairs  ;2  and  a  report  or  decision  omitting 
such  a  statement  is  defective,  and  will  not  be  sustained.3 

The  court  or  referee  is  entitled  to  use  upon  the  hearing 
the  original  petition  and  all  schedules  annexed  thereto, 
and  the  clerk  must  transmit  them  accordingly  upon  the 
written  order  of  the  judge  or  of  the  referee.  In  that 
case  they  must  be  returned  with  the  decision  or  report.4 

The  order  to  show  cause  made  after  the  presentation  of 
the  petition  is  in  the  nature  of  a  process  for  bringing 
persons  interested  before  the  court,  and  the  statutory  pro- 
visions in  regard  to  it  must  be  strictly  complied  with.  Thus, 
it  was  held  that  an  order  to  show  cause  why  the  prayer  of 
the  petition  should  not  be  granted,  there  being  no  provision 
made  therein  for  service  of  a  copy  of  the  petition,  was  not 
sufficient.5 

Where  the  hearing  is  before  a  referee,  a  motion  for 
a  final  order  must  be  made  to  the  court  upon  notice  to  each 
person  who  has  made  himself  a  party  to  the  proceeding,  by 

1  Code  Civ.  Proc.  £  2425.  4  Code  Civ.  Proc.  §  2427. 

2  Id.  §  2426.  5  People  v.  Seneca  Lake  Grape  ana 

3  Matter  of  E.  M.  Boynton  Saw  and  Wine  Co.,  52  Hun,  174. 
File  Co.,  34  Hun,  369. 


DISSOLUTION.  287 

filing  with  the  clerk  before  the  close  of  the  hearing  a  notice 
of  his  appearance  in  person  or  by  attorney,  specifying  a 
post-office  within  the  state  where  such  notice  may  be 
served.  And  such  notice  may  be  served  in  the  manner  pre- 
scribed for  the  service  of  a  paper  upon  an  attorney  in  an 
action.  Where  the  hearing  was  before  the  court,  a  motion 
for  a  final  order  may  be  made  immediately,  or  at  such  time 
and  upon  such  notice  as  the  court  prescribes.' 

Upon  an  application  for  a  final  order,  if  it  appears  to  the 
court  in  a  case  where  the  majority  of  the  directors  favor 
dissolution,  that  the  corporation  is  insolvent,  or  in  any  other 
case  that  for  any  reason  a  dissolution  of  the  corporation 
will  be  beneficial  to  the  interests  of  the  stockholders  and 
not  injurious  to  the  public  interests,  the  court  will  make 
a  final  order  dissolving  the  corporation,  and  appointing  one 
or  more  receivers  of  the  corporation,  and  upon  the  entry  of 
the  order  the  corporation  is  dissolved  ;  and  it  may,  in  its  dis- 
cretion, appoint  a  director,  trustee  or  other  officer,  or  a 
stockholder  of  the  corporation,  a  receiver  of  its  property." 

It  does  not  seem  to  be  mandatory  upon  the  court  in 
such  a  case  to  dissolve  a  corporation,  but  it  will  look  to 
the  interests  of  the  stockholders,  and  determine  for  itself 
whether  a  dissolution  will  be  beneficial  to  them.3 

Transfers  Prohibited. — A  sale,  assignment,  mortage,  con- 
veyance, or  other  transfer  of  any  property  of  the  corporation 
made  after  the  filing  of  a  petition,  as  above  prescribed,  in 
payment  of,  or  as  security  for,  an  existing  or  prior  debt, 
or  for  any  other  consideration,  or  a  judgment  thereafter  ren- 
dered against  the  corporation  by  confession  or  upon  the 
acceptance  of  an  offer,  is  absolutely  void  as  against  the  re- 
ceiver appointed  in  the  special  proceedings  and  as  against 
the  creditors  of  the  corporation.1  But  this  is  not  intended 
to   prevent   a  corporation   collecting  debts  due   it,  or  from 

1  Code  Civ.  Proc.  §  2428.  change.  Com.  Pleas  Sp.  Term.  2  N.  Y. 

-  Id.  2429.  Supp.  257. 

3  In  re  f»/f>ortt-rs'  and  Grocers'  Ex-  4  Code  Civ.  Proc.  §  2430. 


288  THE   LAW    OF   CORPORATIONS. 

paying  or  cancelling  notes  or  choses  in  action  becoming 
due  thereafter,  but  was  intended  to  prohibit  transactions 
designed  to  favor  one  or  more  creditors  or  to  give  them 
a  preference  over  others.1  And  such  a  proceeding  will  not 
prevent  a  corporation  enforcing  a  claim  due  to  it  after  the 
proceeding  is  commenced.2 

Article  II. 
Involuntary  Dissolution. 

Action  to  Procure  Dissolution. — An  action  to  procure  a  judg- 
ment dissolving  a  corporation  created  by  or  under  the  laws 
of  this  state,  and  forfeiting  its  corporate  rights,  privileges 
and  franchises,  may  be  maintained — 

i.  Where  the  corporation  has  remained  insolvent  for  at 
least  one  year. 

2.  Where  it  has  neglected  or  refused  for  at  least  one  year 
to  pay  and  discharge  its  notes  or  other  evidences  of  debt. 

3.  Where  it  has  suspended  its  ordinary  and  lawful  busi- 
ness for  at  least  one  year. 

4.  If  it  has  banking  powers,  or  power  to  make  loans  on 
pledges  or  deposits,  or  to  make  insurance,  where  it  becomes 
insolvent  or  unable  to  pay  its  debts,  or  has  violated  any  pro- 
vision of  the  act  by  or  under  which  it  was  incorporated,  or  of 
any  other  act  binding  upon  it.3 

Such  an  action  may  be  maintained  by  the  attorney- gen- 
eral in  the  name  and  in  behalf  of  the  people  ;  whenever  a 
creditor  or  stockholder  of  any  corporation  submits  to  the 
attorney-general  a  written  statement  of  facts  verified  by 
oath,  showing  grounds  for  an  action,  as  above  stated,  and 
the  attorney-general  omits  for  sixty  days  after  this  submis- 
sion to  commence  an  action,  then  and  not  otherwise  such 
creditor  or  stockholder  may  apply  to  the  proper  court  for 

'  Sands  v.  Hill,  55  N.  Y.  iS;  In  re       31  Hun,  329. 
Waterbury,  8  Paige,  380.  3  Code  Civ.  Proc.  §  1785. 

2  Kingsley  v.  First  National  Bank, 


DISSOLUTION.  289 

leave  to  commence  such  an  action,  and  on  obtaining  leave 
may  maintain  the  same  accordingly.1 

The  Code  provides  two  systems  of  procedure  against  cor- 
porations. Under  the  one  system  the  action  may  be  com- 
menced without  leave  of  the  court  and  tried  as  an  equitable 
action.  Under  the  other  system  the  action  can  be  com- 
menced only  with  such  leave."  It  is  not  a  bar  to  such  an 
action  that  proceedings  for  the  voluntary  dissolution  of  the 
corporation  have  already  been  commenced.3 

It  is  sufficient  in  such  an  action  if  it  is  alleged  in  the 
complaint  that  the  debts  of  the  company  have  remained  "un- 
satisfied for  many  years,  and  that  it  is  without  means  of  pay- 
ment, and  has  become  insolvent  and  unable  to  pay  its  debts, 
and  has  remained  insolvent  for  one  year,  together  with  the 
necessary  facts  to  substantiate  the  general  allegations  as 
above  stated.4 

May  grant  an  Injunction  in  such  an  Action. — The  court 
may,  upon  proof  of  the  facts  authorizing  the  action  to  be 
maintained,  grant  an  injunction  order  restraining  the  corpo- 
ration, its  trustees,  directors,  managers  and  other  officers, 
from  collecting  or  receiving  any  debt  or  demand,  and  from 
paying  out  or  in  any  way  transferring  or  delivering  to  any 
person  any  money,  property  or  effects  of  the  corporation, 
during  the  pendency  of  the  action,  except  by  express  per- 
mission of  the  court.  And  it  may  also  restrain  the  corpo- 
ration from  exercising  any  of  its  corporate  rights,  privileges 
or  franchises  during  the  pendency  of  the  action,  except  by 
such  permission.  Such  an  injunction  can  be  granted,  how- 
ever, only  by  the  court/ 

May  appoint  a  Receiver. — The  court  may  also,  at  any 
stage  of  such  an  action,  appoint  one  or  more  receivers  of 
the  property  of  the  corporation.     A  receiver  so  appointed 

1  Code  Civ.  Proc.  §  17S6.  4  Swords  v .  Northern  Light  Oil  Co., 

8  Herringv.N.Y.tLakeErie&W.  Sup.    Ct.    Gen.   Term,   17    Abb.   N. 

R.  R.  Co.,  105  N.  Y.  340.  C.  115  ;  Medbury  v.  Rochester  Frear 

■  People  v.  Seneca   Lake  Grape  <&*  Stone  Co.,  19  Hun, 

Wine  Co.,  52  Hun,  174.  5  Code  Civ    Proc.  £  1787- 


29O  THE    LAW    OF   CORPORATIONS. 

before  final  judgment  is  a  temporary  receiver  until  final 
judgment  is  entered,  and  as  such  has  power  to  collect  and 
receive  the  debts,  demands  and  other  property  of  the  corpo- 
ration, to  preserve  the  property  and  the  proceeds  of  the 
debts  and  demands  collected,  to  sell  or  otherwise  dispose  of 
the  property  as  directed  by  the  court,  to  collect,  receive  and 
preserve  the  proceeds  thereof,  and  to  maintain  any  action 
or  special  proceeding  for  either  of  those  purposes.  He  must 
qualify  as  prescribed  by  law  for  the  qualification  of  a  per- 
manent receiver.  But  unless  additional  powers  are  specially 
conferred  upon  him,  he  has  no  others  than  the  above  and 
those  which  are  incidental  to  the  exercise  thereof. 

A  receiver  appointed  by  or  pursuant  to  a  final  judgment 
in  an  action,  or  a  temporary  receiver  who  is  continued  by 
the  final  judgment,  is  a  permanent  receiver,  and  has  all  the 
powers  and  authority  conferred  and  is  subject  to  all  the 
duties  and  liabilities  imposed  upon  a  receiver  appointed  upon 
the  voluntary  dissolution  of  a  corporation.1 

A  temporary  receiver  appointed  as  above  is  in  all  respects 
subject  to  the  control  of  the  court,  and  it  may  by  the  order 
or  interlocutory  judgment  appointing  him  or  by  an  order 
subsequently  made  in  the  action,  or  by  the  final  judgment, 
confer  upon  him  the  powers  and  authority  and  subject  him 
to  the  duties  and  liabilities  of  a  permanent  receiver,  or  so 
much  thereof  as  it  thinks  proper,  except  that  he  may  not 
make  any  distribution  among  the  creditors  or  stockholders 
before  final  judgment,  unless  he  is  specially  directed  so  to 
do  by  the  court.'"'  And  such  court  may  forbid  any  interfer- 
ence by  way  of  levy  and  seizure  by  attachment  or  execution 
of  the  property  in  his  possession.3 

A  creditor  cannot  maintain  such  an  action  until  he  has 
obtained  judgment  against  the  corporation.4     And  the  court 

1  Code  Civ.  Proc.  §  1788.  *  Byrne  v.  N.   V.  Brick  d^  Cement 

-  Id.  §  17S9.  Co.,  Sup.   Ct.  Genl.   Term,  16   Wk. 

3  Woerishoffer     v.     North     River  Dig.  139. 
Construction  Co.,  99  N.  Y.  39S. 


DISSOLUTION.  29I 

has  no  power  to  appoint  a  receiver  of  the  property  of  a  cor- 
poration in  an  action  brought  by  a  creditor  at  large  on  behalf 
of  himself  and  others  similarly  situated.1 

A  judgment  creditor  who  has  no  lien  upon  the  property 
of  a  corporation  is  not  entitled  to  notice  of  application  for 
the  appointment  of  a  receiver." 

Action  for  Sequestration  of  Property  of  a  Corporation. — An  action 
that  partakes  of  many  of  the  characteristics  of  an  action  to 
dissolve  a  corporation,  and  one  controlled  by  many  of  the 
provisions  regulating  such  actions,  and  which  suspends  the 
ordinary  business  of  a  corporation  but  does  not  necessarily 
affect  its  corporate  franchises,  is  the  action  for  the  seques- 
tration of  the  property  of  a  corporation  brought  against 
it  by  a  judgment  creditor.3 

The  Code  provides  that  where  a  final  judgment  for  a 
sum  of  money  has  been  rendered  against  a  corporation 
created  by  or  under  the  laws  of  this  state,  and  an  execution 
issued  thereupon  to  the  sheriff  of  the  county  where  the 
corporation  transacts  its  general  business  or  where  its  princi- 
pal office  is  located,  has  been  returned  wholly  or  partly  un- 
satisfied, a  judgment  creditor  may  maintain  an  action  to 
procure  a  judgment  sequestrating  the  property  of  the  cor- 
poration and  for  the  distribution  thereof.4 

In  such  an  action  the  court  may  grant  an  injunction 
order  restraining  the  corporation  and  its  trustees,  directors, 
'managers  and  other  officers  from  collecting  or  receiving  any 
debt  or  demand,  and  from  paying  out  or  in  any  way  trans- 
ferring or  delivering  to  any  person,  any  money,  property  or 
effects  of  the  corporation  during  the  pendency  of  the  action, 
except  by  express  permission  of  the  court ;  *  and  it  may  at 
any  stage  of  such  an  action  appoint  one  or  more  receivers  of 

1  Lehigh  Coal  &■=  Navigation  Co.  v.  Pringle    v.    Woolworth,   go   id.    502. 

Central  R.  R,  of  A'.  J.,  43  Hun,  546.  HollingsheaJ  \ .    Woodward,  35  Hun, 

'-'  Morrison    v.    Menhaden    Co.,    37  410. 

Hun,  522.  4  Code  Civ.  Proc.  §  1784. 

3  Mann   v.    Pentz,    3    N.    Y.    415  ;  5  Id.  §  17S7. 
Kincaid    v.    Dwindle,    59    id.    54S  ; 


292  THE    LAW   OF   CORPORATIONS. 

the  property  of  the  corporation,  and  such  receivers  have  the 
power  of,  and  are  subject  to,  the  provisions  regulating  re- 
ceivers appointed  in  actions  for  the  dissolution  of  corpora- 
tions.1 

If  in  such  an  action,  based  upon  a  judgment  obtained 
against  a  corporation  by  default,  a  receiver  is  appointed  and 
the  default  is  subsequently  opened  and  the  corporation 
allowed  to  come  in  and  defend,  the  order  appointing  a  re- 
ceiver in  the  action  for  sequestration  should  be  vacated  and 
set  aside  as  there  is  no  longer  any  adjudication  that  anything 
is  due  from  the  corporation,  and  this  is  so  although  the 
judgment  and  execution  have  been  allowed  to  stand  as 
security  upon  opening  the  default.2 

Officers  and  Stockholders  may  be  made  Parties. — Where  either 
of  the  above  actions  has  been  brought  by  a  creditor  of  a 
corporation,  and  the  stockholders,  directors,  trustees  or 
other  officers  or  any  of  them  are  made  liable  by  law  in  any 
event  or  contingency  for  the  payment  of  the  debt,  the  per- 
sons so  made  liable  may  be  made  parties  defendant  by  the 
original  or  by  a  supplemental  complaint,  and  their  liability 
may  be  declared  and  enforced  by  the  judgment  in  the 
action.3  Where  they  are  not  made  parties  defendant  the 
plaintiff  may  maintain  a  separate  action  against  them  to 
procure  a  judgment  declaring,  apportioning  and  enforcing 
their  liability.4 

In  either  of  such  cases  the  court  will,  when  it  is  necessary, 
cause  an  account  to  be  taken  of  the  property  and  of  the 
debts  of  the  corporation,  and  the  liability  of  the  defendants 
will  be  apportioned  accordingly.  But  if  it  affirmatively 
appears  that  the  corporation  is  insolvent  and  has  no  prop- 
erty to  satisfy  its  creditors,  the  court  may,  without  taking 
such  an  account,  ascertain  and  determine  the  amount  of  each 
defendant's  liability,  and  enforce  the  same  accordingly.5 

1  Code  Civ.  Proc.  §  1788.  3  Code  Civ.  Proc.  §  1790. 

'-'  Radbourn  v.  Utica,  Ithaca  c^  E.  4  Id.  §  1791. 

R.  Co.,  2S  Hun,  369.  5  Id.  §  1792. 


DISSOLUTION.  293 

What  the  Judgment  must  Provide. — A  final  judgment  in  an 
action  for  the  dissolution  of  a  corporation  brought  as  above, 
or  for  the  sequestration  of  its  property,  separately  or  in  con- 
junction with  its  stockholders,  directors,  trustees  or  other 
officers,  must  provide  for  a  just  and  fair  distribution  of  the 
property  of  the  corporation,  and  of  the  proceeds  thereof, 
'among  its  fair  and  honest  creditors  in  the  order  and  in  the 
proportions  prescribed  by  law  in  case  of  the  voluntary  dis- 
solution of  a  corporation.1 

Where  the  stockholders  are  parties  to  the  action,  if  the 
property  of  the  corporation  is  not  sufficient  to  discharge  its 
debts,  the  interlocutory  or  final  judgment,  as  the  case  re- 
quires, must  adjudge  that  each  stockholder  pay  into  court 
the  amount  due  and  remaining  unpaid  on  the  shares  of 
stock  held  by  him,  or  so  much  thereof  as  is  necessary  to 
satisfy  the  debts  of  the  corporation.2 

If  it  appears  that  the  property  of  the  corporation,  and 
the  sums  collected  or  collectible  from  the  stockholders  upon 
their  stock  subscriptions  are  or  will  be  insufficient  to  pay  the 
debts  of  the  corporation,  the  court  must  ascertain  the  several 
sums  for  which  the  directors,  trustees  or  other  officers  or  the 
stockholders  of  the  corporation,  being  parties  to  the  action, 
are  liable,  and  must  adjudge  that  the  same  be  paid  into 
court  to  be  applied  in  such  proportions  and  in  such  order  as 
justice  requires  to  the  payment  of  the  debts  of  the  corpora- 
tion.3 

Where,  in  such  an  action,  stockholders  were  in  posses- 
sion of  assets  of  the  corporation  which  were  necessary  to  pay 
the  debts  and  expenses,  and  which  they  had  no  right  to 
retain,  and  such  facts  were  so  determined  by  a  referee  before 
whom  they  appeared  without  questioning  his  right  to  deter- 
mine the  amount  of  assets  which  they  should  restore,  it  was 

1  Code  Civ.  Proc.  §  1793.  existence  of  particular  corporations, 

a  Id.  §  1794.  nor  tne  manner  of  enforcing  the  lia- 

3  Id.   §   1795.     The   above    provi-  bility  of   their  stockholders.     Id.   § 

sions  do  not  affect  any  special  pro-  1796- 

visions  affecting  the  cessation  of  the 


294  THE   LAW   0F   CORPORATIONS. 

held  that  although  such  judgment  entered  upon  the  report 
of  the  referee  went  beyond  the  legitimate  and  regular  pur- 
poses of  the  action,  yet  as  they  might  have  been  brought  in 
by  a  supplementary  complaint,  by  their  voluntary  appear- 
ances they  had  rendered  this  unnecessary,  and  the  court  had 
power  to  make  a  final  determination  of  the  question,  and 
that  they  then  could  not  be  heard  to  complain.1 

Judicial  Supervision  of  Corporations. — An  action  may  be  main- 
tained against  one  or  more  trustees,  directors,  managers,  or 
other  officers  of  a  corporation  to  procure  a  judgment  for  the 
following  purposes,  or  so  much  thereof  as  the  case  requires: 

i.  Compelling  the  defendants  to  account  for  their  official 
conduct  in  the  management  and  disposition  of  the  funds 
and  property  committed  to  their  charge. 

2.  Compelling  them  to  pay  to  the  corporation  which  they 
represent,  or  to  its  creditors,  any  money  and  the  value  of 
any  property  which  they  have  acquired  to  themselves,  or 
transferred  to  others,  or  lost,  or  wasted  by  a  violation  of 
their  duties. 

3.  Suspending  a  defendant  from  exercising  his  office 
where  it  appears  that  he  has  abused  his  trust. 

4.  Removing  a  defendant  from  his  office  upon  proof  or 
conviction  of  misconduct,  and  directing  a  new  election  to 
be  held  by  the  body  or  board  duly  authorized  to  hold  the 
same,  in  order  to  supply  the  vacancy  created  by  the  re- 
moval ;  or  where  there  is  no  such  body  or  board,  or  where 
all  the  members  thereof  are  removed,  directing  the  removal 
to  be  reported  to  the  Governor,  who  may,  with  the  advice 
and  consent  of  the  Senate,  fill  the  vacancies. 

5.  Setting  aside  an  alienation  of  property  made  by  one 
or  more  trustees,  directors,  managers,  or  other  officers  of  a 
corporation  contrary  to  a  provision  of  law,  or  for  a  purpose 
foreign  to  the  lawful  business  and  objects  of  the  corporation, 
where  the  alienee  knew  the  purpose  of  the  alienation. 

6.  Restraining  and  preventing  such  an  alienation  where 

1  People  v.   Hydrostatic  Paper  Co.,  88  N.  Y.  623. 


DISSOLUTION.  295 

it  is  threatened,  or  where  there  is  good  reason  to  apprehend 
that  it  will  be  made.' 

Such  an  action  may  be -brought  by  the  attorney-general 
in  behalf  of  the  people  of  the  state,  or,  except  where  it  is 
brought  for  the  purposes  specified  in  subdivisions  third  and 
fourth  as  given  above,  by  a  creditor  of  the  corporation,  or 
by  a  trustee,  director,  manager,  or  other  officer  of  the  cor- 
poration having  a  general  superintendence  of  its  concerns." 
But  such  an  action  does  not  divest  any  visitorial  power  over 
a  corporation  which  is  vested  by  statute  in  the  corporate 
body  or  a  public  officer.3 

Such  an  action  cannot  be  maintained  by  the  attorney 
general  where  it  is  brought  solely  for  the  purpose  of  enforc- 
ing or  protecting  private  rights,  as  the  state  has  no  interest 
in  the  property  of  private  business  corporations,  and  with- 
out showing  that  the  action  is  for  the  public  benefit  and  not 
for  that  of  private  individuals,  it  cannot  be  maintained.4 

Action  to  Annul  a  Corporation — The  attorney-general,  when- 
ever he  is  so  directed  by  the  legislature,  must  bring  an  action 
against  a  corporation  created  by  or  under  the  laws  of  the 
state  to  procure  a  judgment  vacating  or  annulling  the  act  of 
incorporation  or  any  act  renewing  the  corporation,  or  con- 
tinuing its  corporate  existence,  upon  the  ground  that  the  act 
was  procured  upon  a  fraudulent  suggestion  or  the  conceal- 
ment of  a  material  fact  made  by  or  with  the  knowledge  and 
consent  of  any  of  the  persons  incorporated.''  But  the  fact 
that  the  attorney-general  is  instructed  by  the  legislature  to 
bring  such  an  action  does  not  determine  its  validity,  and  the 
court  may  dismiss  the  complaint,  or  make  such  other  dis- 
posal of  the  case  as  it  may  deem  proper." 

1  Code  Civ.  Proc.  £  1781.  Supp.  845.    See  also  People  v.  Brook- 

4  Id.  §  1782.  lyn,  dc,  P.,  Co.,  S9  N.  Y.  75;  People 

3  Id.  §  17S3.  v.  Lowe,  117  N.  Y.   175. 

4  People  v.  Ballard,  Sup.  Ct.  Genl.           5  Code  Civ.  Proc.  §  1797. 

Term,  S  N.  Y.  Supp.  91S.     See  S.  C.  "  Attorney-Genl.   v.  Bank  of  Niag- 

Sp.    Term,   and   authorities  cited  in       ara,  Hopk.  Ch.   354. 
opinion    of    Ingraham,    }.,  3    N.  Y. 


296  THE   LAW   OF   CORPORATIONS. 

Upon  leave  being  granted  by  the  court,  the  attorney- 
general  may  bring  an  action  against  a  corporation  created 
by  or  under  the  laws  of  the  state,  to  procure  a  judgment  va- 
cating the  charter  or  annulling  the  existence  of  the  corpora- 
tion upon  the  ground  that  it  has  either — 

1.  Offended  against  any  provision  of  an  act  by  or  under 
which  it  was  created,  altered,  or  renewed,  or  an  act  amend- 
ing the  same,  and  applicable  to  the  corporation  ;  or, 

2.  Violated  any  provision  of  law  whereby  it  has  forfeited 
it  charter,  or  become  liable  to  be  dissolved  by  the  abuse  of 
its  power ;  or, 

3.  Forfeited  its  privileges  or  franchises  by  a  failure  to 
exercise  it's  powers  ;  or 

4.  Done  or  omitted  any  act  which  amounts  to  a  surrender 
of  its  corporate  rights,  privileges  and  franchises  ;  or, 

5.  Exercised  a  privilege  or  franchise  not  conferred  upon 
it  by  law.1 

The  court  upon  application  for  leave  to  bring  such  an 
action  will  not  inquire  whether  bringing  the  proposed  action 
is  a  wise  administrative  act,  but  only  whether  the  attorney- 
general  alleges  &  prima  facie  case,  or  a  case  of  such  gravity 
that  it  should  be  judicially  determined.2  And  it  is  not 
sufficient  foundation  for  a  judgment  against  a  corporation 
in  such  an  action  forfeiting  its  franchises  that  there  is 
merely  a  breach  of  the  letter  of  some  requirement  of  the 
law  under  which  it  is  organized,  but  there  must  be  a  breach 
of  the  intent  and  the  meaning  of  the  law.  It  was  held, 
therefore,  that  the  fact  that  a  turnpike  company  was  re- 
quired by  the  act  under  which  it  was  incorporated  to  keep 
its  road  in  the  same  condition  required  in  its  original  con- 
struction, was  not  brought  within  the  provisions  of  the  act 
on  account  of  a   technical  breach   of  the   provision,  but  it 

1  Code  Civ.  Proc.  §  179S.  eral,  Sup.   Ct.   Genl.  Term,  3  N.  Y. 

-  In    re    Applic.    of  Atlorney-Gcn-       Supp.  464. 


DISSOLUTION.  297 

must  be  shown  that  there  was  such  a  want  of  repair  as  would 
render  the  road  dangerous  or  inconvenient  to  travellers.1 

In  a  recent  and  very  important  case"  it  was  held  that  the 
action  of  the  trustees  and  stockholders  of  a  company  in 
transferring  its  capital  stock  to  persons  in  control  of  a  com- 
bination of  all  the  corporations  engaged  in  business  of  the 
same  nature,  and  thereby  placing  the  control  of  its  business 
in  the  hands  of  such  persons,  was  such  an  abandonment  of 
the  authority  to  manage  its  affairs,  vested  in  it  by  statute, 
as  would  sustain  an  action  brought  by  the  attorney-general 
against  it  to  annul  its  charter.  By  such  a  course  it  was 
held  that  it  had  violated  the  law,  and  forfeited  its  charter, 
and  should  be  dissolved  for  such  abuse  of  its  powers. 

A  party  which  would  be  directly  affected  by  the  dissolu- 
tion of  a  corporation  is  entitled  to  notice  of  the  application, 
and  if  his  interest  is  sufficient,  to  be  made  a  part}-  defendant 
to  the  action.  This  was  so  held  where  an  action  was 
brought  by  the  attorney-general  to  vacate  the  charter  of  a 
railroad  company  which  had  leased  a  portion  of  its  road  to 
another  company,  and  the  lessee,  upon  its  application,  was 
made  a  party  to  the  action.3 

Before  granting  leave  to  bring  such  an  action  the  court 
may,  in  its  discretion,  require  such  previous  notice  of  the 
application  as  it  thinks  proper  to  be  given  to  the  corpora- 
tion or  any  officer  thereof,  and  may  hear  the  corporation  in 
opposition  thereto.4  But  whether  or  not  notice  of  such 
application  shall  be  given  rests  entirely  in  the  discretion  of 
the  court,  and  its  failure  to  require  any  notice  to  be  given 
does  not  render  an  order  subsequently  made  in  the  action 
invalid.5 

1  People  v.     WUUamsbwgh    Turn.  22  Abb.   N.    C.    164;    16  Civ.    Proc. 
pike,  etc,  Co.,  47  N.  Y.  5S6.  Rep.  1  :  19  St.  Rep.  S53. 

2  People  v.  North  River  Sugar  Re-  :;  People  v.  Albany   &  Vermont  K. 
fining  Co.    Sup.    Ct.   Genl.   Term,   7  A'.  Co..  77  X.  Y.  2-,2. 

N.    Y.    Supp.    406.      See   S.    C.  Sp.  4  Code  Civ.  Proc.  £  1799. 

Term,  and  authorities  cited  in  opin-  5  People  v.  Boston,  Hoosac   Tunnel. 

on  of  Barrett,  J.,  3  N.  Y.  Supp.  401;      etc.,  R.  Co.,  27  Hun,  52S. 


298  THE    LAW    OF   CORPORATIONS. 

Such  an  action  is  triable  of  course,  and  of  right  by  a  jury 
and  without  procuring  an  order  for  that  purpose.'  • 

Upon  establishing  the  facts  above  stated,  the  court  may 
render  final  judgment  that  the  corporation  and  each  officer 
thereof  be  perpetually  enjoined  from  exercising  any  of  its 
corporate  rights,  privileges  and  franchises,  and  that  it  be 
dissolved.  The  judgment  must  also  provide  for  the  appoint- 
ment of  a  receiver,  the  taking  of  an  account,  and  the  dis- 
tribution of  the  property  of  the  corporation  among  its 
creditors  and  stockholders,  as  where  a  corporation  is  dis- 
solved upon  its  voluntary  application.2 

An  injunction  order  may  be  granted  at  any  stage  of  such 
an  action,  restraining  the  corporation  and  any  or  all  of  its 
directors,  trustees  and  other  officers  from  exercising  any  of 
its  corporate  rights,  privileges  or  franchises,  or  from  exercis- 
ing certain  of  its  corporate  rights,  privileges  or  franchises 
specified  in  the  injunction  order,  or  from  exercising  any 
franchise,  liberty  or  privilege,  or  transacting  any  business 
not  allowed  by  law.3 

Where  final  judgment  is  rendered  in  such  an  action  the 
attorney-general  must  cause  a  copy  of  the  judgment  roll  to 
be  forthwith  filed  in  the  office  of  the  secretary  of  state,  and 
will  cause  a  notice  of  the  substance  and  effect  of  the  judg- 
ment to  be-  published  for  four  weeks  in  the  newspaper 
printed  in  Albany  in  which  legal  notices  are  required  to  be 
published,  and  also  in  a  newspaper  printed  in  the  county 
wherein  the  principal  place  of  business  of  the  corporation 
was  located.* 

GENERAL  PROVISIONS  APPLICABLE  TO  THE  ABOVE  ACTIONS. 

In  the  above  actions  a  stockholder,  officer,  alienee  or 
agent  of  a  corporation  is  not  excused  from  answering  a 
question   relating  to  the  management  of  a  corporation,  or 

1  Code  Civ.  Proc.  §  1S00.  3  Id.  §  1802. 

2  Id.  §  1S01.  4  Id-  §  1803. 


DISSOLUTION.  299 

the  transfer  or  disposition  of  its  property  on  the  ground 
that  his  answer  may  expose  the  corporation  to  a  forfeiture 
of  any  of  its  corporate  rights,  or  will  tend  to  convict  him  of 
a  criminal  offence,  or  to  subject  him  to  a  penalty  or  for- 
feiture, but  his  testimony  cannot  be  used  as  evidence  against 
him  in  a  criminal  action  or  special  proceeding.' 

In  such  an  action  the  court  may,  in  its  discretion,  on  the 
application  of  either  party,  at  any  stage  of  the  action,  before 
or  after  final  judgment,  and  with  or  without  security,  grant 
an  injunction  order  restraining  the  creditors  of  the  corpora- 
tion from  bringing  actions  against  the  defendants,  or  an)-  of 
them,  for  the  recovery  of  a  sum  of  money,  or  from  taking 
any  further  proceedings  in  such  actions  theretofore  com- 
menced. Such  an  injunction  has  the  same  effect,  and  except 
as  otherwise  expressly  prescribed  as  above,  is  subject  to  the 
same  provisions  of  law  as  if  each  creditor  upon  whom  it  is 
served  was  named  therein  and  was  a  party  to  the  action  in 
which  it  is  granted.2  And  the  court  may  make  an  order 
requiring  all  the  creditors  of  the  corporation  to  exhibit  and 
prove  their  claims  and  thereby  make  themselves  parties  to 
the  action  in  such  a  manner  and  in  such  reasonable  time,  not 
less  than  six  months  from  the  first  publication  of  the  notice 
of  the  order,  as  the  court  directs,  and  that  the  creditors 
who  make  default  in  so  doing  shall  be  precluded  from  all 
benefit  of  the  judgment  and  from  any  distribution  which 
may  be  made  thereunder,  and  notice  of  such  order  must  be 
given  by  publication  in  such  newspapers  and  for  such  a 
length  of  time  as  the  court  directs. 

It  is  provided,  however,  that  notwithstanding  such  an 
order,  any  such  creditor  wrho  may  exhibit  and  prove  his 
claim  in  the  manner  directed  thereby,  with  proof  by  affidavit 
or  otherwise  that  he  has  had  no  notice  or  knowledge  thereof 
in  time  to  comply  therewith  any  time  before  an  order  is 
made  directing  a  final  distribution  of  the  assets  of  such  cor- 

1  Code  Civ.  Proc.  §  1805.  -  Id.  §  1S06. 


300  THE   LAW   OF   CORPORATIONS. 

poration,  shall  be  entitled  to  have  his  claim  received  and 
shall  have  the  same  rights  and  benefits  thereon,  so  far  as 
the  assets  of  such  corporation  then  remaining  undistributed 
may  render  possible,  as  if  his  claim  had  been  exhibited  and 
proved  within  the  time  limited  by  such  order.1 

Except  where  the  atorney-general  is  directed  by  the 
legislature  to  bring  an  action  against  a  corporation,  he  must 
if  he  has  good  reason  to  believe  that  an  action  can  be  main- 
tained in  behalf  of  the  people  of  the  state,  as  prescribed 
above,  bring  an  action  accordingly,  or  apply  to  a  competent 
court  for  leave  to  bring  an  action,  as  the  case  requires,  if  in 
his  opinion  the  public  interests  require  that  an  action  should 
be  brought.  In  a  case  where  the  action  can  be  brought 
only  by  the  attorney-general  in  behalf  of  the  people,  if  a 
creditor,  stockholder,  director  or  trustee  of  the  corporation 
applies  to  the  attorney-general  for  that  purpose  and  fur- 
nishes the  security  required  by  law,  the  attorney-general 
must  bring  the  action  or  apply  for  leave  to  bring  it,  if  he 
has  good  reason  to  believe  that  it  can  be  maintained. 

Where  such  an  application  is  made  on  the  relation  or 
information  of  such  a  person  having  an  interest  in  the  ques- 
tion, the  complaint  must  allege  and  the  title  of  the  action 
must  show  that  the  action  is  brought  upon  the  relation  of 
that  person,  who  must  give  satisfactory  security  to  indem- 
nify the  people  against  the  costs  and  expenses  thereof. 
And  the  attorney-general  is  entitled  to  compensation  for  his 
services,  to  be  paid  by  the  relator  in  like  manner  as  the 
attorney  and  counsel  for  a  private  person.2 

When  Injunction  may  Issue. — An  injunction  order  suspend- 
ing the  general  and  ordinary  business  of  a  corporation,  or 
suspending  from  office,  or  restraining  from  the  performance 
of  his  duties,  a  trustee,  director  or  other  officer  thereof,  can 
be  granted  only  by  the  court  upon  notice  of  the  application 
therefor  to  the  principal  officer  of  the  corporation,  or  to  the 

1  Code  Civ.  Proc.  §  1807.  -  Id.  §§  1808,  19S6. 


DISSOLUTION.  301 

trustee,  director  or  other  officer  enjoined,  and  if  otherwise 
made,  such  an  injunction  is  void.1 

A  trustee,  director  or  other  officer  of  a  corporation  can- 
not be  suspended  or  removed  from  office  by  a  court  or 
judge  otherwise  than  by  the  final  judgment  of  a  compe- 
tent court,  in  an  action  brought  by  the  attorney-general  for 
that  purpose.2 

These  provisions  apply  to  an  action  or  special  proceed- 
ing against  a  corporation  created  by  or  under  the  laws  of  this 
state,  or  a  trustee,  director,  or  other  officer  thereo  ;  or  against 
a  corporation  created  by  or  under  the  laws  of  another  state, 
government  or  country,  or  a  trustee,  director  or  other  officer 
thereof,  where  the  corporation  does  business  within  the 
state,  or  has  within  the  state  a  business  agency,  or  a  fiscal 
agency,  or  an  agency  for  the  transfer  of  its  stock.3 

Where  an  action  authorized  by  a  law  of  the  state  is 
brought  against  one  or  more  persons  as  stockholders  of  a 
corporation,  an  objection  to  any  of  the  proceedings  cannot 
be  taken  by  a  person  properly  made  a  defendant  in  the 
action,  on  the  ground  that  the  plaintiff  has  joined  with  him 
as  a  defendant  in  the  action  a  person  whose  name  appears 
on  the  stock  books  of  the  corporation  or  association,  as  a 
stockholder  thereof,  by  the  name  so  appearing,  but  who  is 
misnamed,  or  dead,  or  is  not  liable  for  any  cause.  In  such  a 
case  the  court  may  at  any  time  before  final  judgment,  upon 
motion  of  either  party,  amend  the  pleadings  and  other 
papers,  without  prejudice  to  the  previous  proceedings,  by 
substituting  the  true  name  of  the  person  intended,  or  by 
striking  out  the  name  of  the  person  who  is  dead  or  not 
liable,  and  in  a  proper  case  inserting  the  name  of  his  repre- 
sentative  or  successor.4 

Winding  up  Corporations  Dissolved  by  the  Legislature. — When- 
ever any  corporation  organized  under  the  laws  <>t  this  state 
is  annulled  and- dissolved  by  an  act   of  the  legislature,  it   is 

1  Code  Civ.  Proc.  §  1S09.  fd.  §  1S12. 

*  Id.  §  1S11.  4  Id.  §  i3i3. 


302  THE   LAW    OF   CORPORATIONS. 

the  duty  of  the  attorney-general  immediately  thereafter  to 
bring  a  suit  to  wind  up  and  finally  settle  and  adjust  the 
affairs  of  such  annulled  and  dissolved  corporation.1 

Such  suit  must  be  brought  in  the  Supreme  Court,  in  the 
name  of  the  people  of  the  state,  in  any  county  which  the 
attorney-general  may  select.  The  president,  or  vice-presi- 
dent, or  secretary,  or  treasurer  of  such  dissolved  corpora- 
tion, who  may  have  been  in  office  at  the  time  of  the  disso- 
lution thereof  must  be  named  as  such  officer  as  defendant 
in"  such  suit,  and  the  summons  and  complaint  served  upon 
him.  If  at  the  time  of  such  annulment  and  dissolution 
there  is  not  one  of  the  above  designated  officers  of  such 
corporation,  then  such  suit  may  be  brought  against  and 
the  summons  and  complaint  therein  served  upon  any  one 
of  the  persons  who  were  last  acting  as  directors  of  such 
corporation.  * 

Upon  the  presentation  of  a  certified  copy  of  the  act  of 
the  legislature  annulling  and  dissolving  a  corporation,  and 
of  the  summons  and  complaint  found  thereon,  it  is  the  duty 
of  the  Special  Term  of  the  Supreme  Court  in  the  county 
designated  by  such  summons  and  complaint,  or  of  any  judge 
of  such  court  who  resides  in  the  judicial  department  in 
which  such  county  is  situated,  immediately  to  appoint  a  re- 
ceiver of  the  assets  and  property  of  such  dissolved  corpora- 
tion, and  the  person  so  appointed  will  be  both  the  tempo- 
rary and  permanent  receiver  thereof,  but  no  one  of  the 
officers,  directors  or  stockholders  of  such  corporation  may 
be  appointed  such  receiver.3 

An  issue  raised  by  answer  or  demurrer  or  otherwise  to 
the  complaint  in  such  action  will  not  be  permitted  to  stay 
a  proceeding  of  the  receiver,  or  court,  or  a  judge  thereof.4 

Upon  the  expiration  of  the  term  of  the  existence  of  a  cor- 
poration as  limited  by  its  charter,  it  becomes  extinct  without 

1  Laws  of  1886,  chap.  310,  §  1.  3  Id.  §  3. 

a  Id.  §  2.  4  Id-  §  7- 


DISSOLUTION.  303 

any  formal  decree  of  dissolution,  and  a  judgment  thereafter 
rendered  against  it  in  an  action  then  pending  is  void,  unless 
such  action  be  continued  by  order  of  the  court.'  And  such 
an  action  will  abate  unless  so  continued.'2 

Article    III. 
Receivers. 

When  a  Receiver  will  be  Appointed.— A  receiver  of  the  prop- 
erty of  a  corporation  can  be  appointed  only  by  the  court, 
and  in  one  of  the  following  cases  : 

1.  An  action  brought  as  prescribed  in  the  last  article  for 
the  dissolution,  annulling  or  supervision  of  a  corporation,  or 
for  the  sequestration  of  its  property. 

2.  An  action  brought  for  the  foreclosure  of  a  mortgage 
upon  the  property  of  which  the  receiver  is  appointed,  where 
the  mortgage  debt  or  the  interest  thereupon  has  remained  un- 
paid at  least  thirty  days  after  it  was  payable,  and  after  pay- 
ment thereof  was  duly  demanded  of  the  proper  officer  of 
the  corporation;  and  where  either  the  income  of  the  prop- 
erty is  specifically  mortgaged,  or  the  property  itself  is  prob- 
ably insufficient  to  pay  the  mortgage  debt. 

3.  An  action  brought  by  the  attorney-general  or  by  a 
stockholder  to  preserve  the  assets  of  a  corporation  having 
no  officer  empowered  to  hold  the  same. 

4.  A  special  proceeding  for  the  voluntary  dissolution  of 
a  corporation. 

Where  the  receiver  is  appointed  in  an  action  otherwise 
than  by  or  pursuant  to  a  final  judgment,  notice  of  the  appli- 
cation for  his  appointment  must  be  given  to  the  proper 
officer  of  the  corporation/ 

These  provisions  apply  to  an  action  or  a  special  pro- 
ceeding against  a  corporation  created  by  or  under  the 
laws   of    the  state,   or    a  trustee,   director,  or  other   officer 

1  Sturges   v.   Vanderbilt    73  N\   Y.  -  McCulloch  v.  Norwood,   5S  \T.  Y. 

3S4-  5^2. 

3  Code  Civ.  Proc.  §  1S10. 


304  THE   LAW    OF   CORPORATIONS. 

thereof ;  or  against  a  corporation  created  by  or  under  the 
laws  of  another  state,  government  or  country,  or  a  trustee, 
director  or  other  officer  thereof,  where  the  corporation  does 
business  within  the  state,  or  has  within  the  state  a  business 
agency,  or  a  fiscal  agency,  or  an  agency  for  the  transfer  of 
its  stock.1  But  the  court  may,  in  its  discretion,  attach  such 
conditions  as  it  may  see  fit  to  such  an  order,  and  such  dis- 
cretion will  not  be  reviewed.2 

The  appointment  of  a  receiver  is  a  proceeding  against 
the  corporation,  and  if  the  appointment  in  such  proceeding 
is  binding  upon  the  corporation  it  cannot  be  attacked  col- 
laterally, as  no  one  else  can  question  it.3 

The  order  appointing  a  receiver  must  designate  one  or 
more  places  of  deposit,  wherein  all  funds  of  the  corporation 
not  needed  for  immediate  disbursement  shall  be  deposited, 
and  no  deposits  or  investments  of  such  trust  funds  may  be 
made  elsewhere  except  upon  the  order  of  the  court  upon 
due  notice  given  to  the  attorney-general.4 

The  receiver  represents  both  ^he  corporation  and  the 
creditors  and  stockholders,  and  in  his  character  as  trustee 
for  the  stockholders  he  may  disaffirm  and  maintain  an  ac- 
tion to  set  aside  any  illegal  or  fraudulent  transfers  of  the 
property  of  the  corporation  made  by  its  officers  or  agents, 
or  for  the  purpose  of  the  recovery  of  any  of  its  funds  or 
securities  misapplied  by  them.' 

All  Property  to  Vest  in  Receiver. —  Except  in  the  case  of 
insurance  companies,  in  all  cases  where  receivers  of  corpora- 
tions are  appointed  on  application  by  the  attorney-general, 
all  property  real  and  personal  and  all  securities  of  every 
kind  and  nature,  belonging  to  such  corporation,  no  matter 
where    located    or  by  whom   held,  must   be   transferred  to- 

1  Code  Civ.  Proc.  §  1S12.  tual  Life  Ins.  Co.,  77  id.  272. 

2  Syracuse   Savings  Bank  v.  Syra-  4  Laws  of  1883,  chap.  378,  §  3. 
cuse,  C.  &  N.  Y.  A\  Ii.  Co.,  SS  N.  Y.  6  Laws  of  1S58,  chap.   314;  Attor- 
lio,  ney    General  v.  Guardian  Mut.  Lije 

:;  Whittlesey  v.  Frantz,  74  N.  Y.  456;       Ins.  Co.,  77  N.  Y.  272. 
Attorney-General     v.    Guardian    Mu- 


DISSOLUTION.  305 

vested  in,  and  held  by  such  receiver.  It  is  provided,  how, 
ever,  that  such  transfer  shall  only  be  made  when  directed  by 
an  order  of  the  Supreme  Court,  due  notice  of  the  application 
for  such  order  having  been  made  on  the  attorney-general 
and  the  custodian  of  the  funds,  securities  or  property.1 

In  the  case  where  a  life  insurance  or  annuity  company  is 
dissolved,  and  a  receiver  thereof  appointed  upon  the  applica- 
tion of  the  attorney-general  or  by  an  action  begun  in  the 
name  of  the  people  of  the  State  of  New  York,  each  and 
every  security  and  fund,  which  has  been  deposited  by  such 
company  prior  to  its  dissolution,  with  the  Superintendent  of 
the  Insurance  Department  for  the  security  and  protec- 
tion of  its  policy-holders,  or  any  class  of  such  policy-holders 
under  the  statutes  in  such  cases  made  and  provided,  may, 
by  an  order  of  the  Supreme  Court  made  at  a  Special  Term 
thereof  held  within  the  judicial  district  in  which  the  princi- 
pal office  of  such  company  was  located  prior  to  its  dissolu- 
tion, upon  the  application  of  the  attorney-general,  after 
service  of  eight  days'  written  notice  of  such  application  upon 
the  Superintendent  of  the  Insurance  Department,  be  trans- 
ferred from  him  to  the  receiver,  and  he  will  thereupon  deliver 
such  funds  and  securities  to  the  receiver,  and  in  him  the 
title  thereto  will  immediately  vest. 

It  is  the  duty  of  the  receiver  to  convert  such  securities 
and  funds  into  money  and  distribute  the  proceeds  thereof 
among  the  respective  holders  of  valid  policies  of  such  com- 
pany for  whose  benefit  and  security  the  deposits  were  origi- 
nally made,  proportionately  to  the  respective  valuations  of 
such  policies  as  shall  be  ascertained  in  proceedings  taken  by 
such  receiver  for  the  valuation  of  policies,  and  the  determi- 
nation of  the  liabilities  of  such  company  under  the  statutes 
in  such  cases  made  and  provided,  and  the  course  and  prac- 
tice of  the  Supreme  Court  in  cases  of  insolvent  corporations, 
until  such  valuation  shall  have   been   paid  in  full.     If  any 

1  Laws  of  1SS4,  chap.  2S5,  §  r. 


306  the  law  of  corporations. 

portion  of  such  proceeds  shall  then  remain,  the  balance  may, 
under  an  order  of  the  Supreme  Court  duly  made  at  Special 
Term,  be  made  a  part  of  the  general  assets  of  such  receiver- 
ship, and  be  distributed- by  the  receiver  in  payment  of  or 
upon  the  general  liabilities  of  such  dissolved  company,  ac- 
cording to  law.1 

A  court  having  the  power  to  appoint  receivers  of  the  as- 
sets of  an  insolvent  corporation  may  in  aid  of  their  appoint- 
ment forbid  any  after  interference  by  way  of  levy  or  seizure 
by  attachment  and  execution  of  the  property  in  his  posses- 
sion.2 

Attorney-General  may  Apply  for  the  Removal  of  a  Receiver. 
— The  attorney-general  may,  at  any  time  he  deems  that  the 
interests  of  the  stockholders,  creditors,  policy-holders,  de- 
positors, or  other  beneficiaries  interested  in  the  proper  and 
speedy  distribution  of  the  assets  of  any  insolvent  corpora- 
tion will  be  subserved  thereby,  make  a  motion  in  the 
Supreme  Court  at  a  Special  Term  thereof,  in  any  judicial  dis- 
trict, for  an  order  removing  a  receiver  and  appointing  an- 
other in  his  stead,  or  to  compel  him  to  account,  or  for  such 
other  and  additional  order  or  orders  as  to  him  may  seem 
proper  to  facilitate  the  closing  up  of  the  affairs  of  any  such 
receivership,  and  any  appeal  from  such  an  order  must  be  to 
the  General  Term  of  the  department  in  which  such  motion 
is  made.3 

Receivers  in  Voluntary  Proceedings  for  Dissolution. — By  the 
repealing  act  of  1880,  it  was  provided  that  sections  sixty-six 
to  eighty-nine  inclusive,  of  article  third,  chapter  eighth  of 
part  third  of  the  Revised  Statutes  should  be  and  remain  ap- 
plicable to  receivers  appointed  in  proceedings  for  the  volun- 
tary dissolution  of  corporations.4 

These  sections  provide  that  any  of  the  directors,  trustees 
or   other  officers   of  such   corporation   or  any  of  its  stock- 

1  Laws  of  18S4,  chap.  285,  §  2  3  Laws  of  1SS3,  chap.  378,  §  7. 

2  Woerishoffer  v.  North  River  Con-  4  Laws  of  1SS0,  chap.  245. 
struction  Co.,  99  N.  Y.  39S. 


DISSOLUTION.  307 

holders  may  be  appointed  receivers,  and  that  before  enter- 
ing upon  the  duties  of  their  appointment  they  must  give 
such  security,  conditioned  for  the  faithful  discharge  of  their 
duties,  as  the  court  may  direct,1  and  that  thereupon  they 
shall  be  vested  with  all  the  estate  of  such  corporation,  and 
shall  be  trustees  for  the  benefit  of  its  creditors  and  stock- 
holders," and  have  all  the  power  and  authority  conferred  by 
law  upon  trustees  of  insolvent  debtors,"  and  may  bring  ac- 
tions to  recover  any  instalments  due  upon  any  shares  of 
stock  subscribed  in  such  corporation.4 

Immediately  upon  their  appointment  they  must  give 
notice  thereof,  which  notice,  in  addition  to  the  matters  re- 
quired by  law  in  notices  of  trustees  of  insolvent  debtors, 
must  require  all  persons  holding  any  open  or  subsisting  con- 
tract of  such  corporation  to  present  the  same  in  writing  and 
in  detail  to  such  receivers  at  the  time  and  place  in  such 
notice  specified.  And  such  notice  must  be  published  for 
three  weeks  in  the  state  paper  and  in  a  newspaper  printed 
in  the  county  where  the  principal  place  of  conducting  the 
business  of    such  corporation  has  been  situated." 

All  sales,  assignments,  transfers,  mortgages  and  convey- 
ances of  any  part  of  the  estate  of  such  corporations  made 
after  filing  the  petition  for  a  dissolution,  in  payment  of,  or  as 
security  for,  any  existing  or  prior  debt,  or  for  any  other  con- 
siderations, and  all  judgments  confessed  by  such  corporation 
are  absolutely  void  as  against  receivers,  and  as  against  the 
creditors.6 

After  the  first  publication  of  the  notice  of  the  appoint- 
ment of  receivers,  every  person  having  possession  of  any 
property  belonging  to  such  corporation,  and  every  person 
indebted  to  such  corporation  must  account  and  answer  for 
the  amount  of  such  debt,  and  for  the  value  of  such  property, 

1  Rev.   Stat  ,    part  III.  chap.    viii.          4  Id.  §69. 

title  4,  art.  3,  §  66.  6  Id.  §  70. 

s  Id.  §  67.  b  Id.  g  71. 
3  Id.  8  68. 


308  THE    LAW    OF   CORPORATIONS. 

to  the  receivers.  And  the  provisions  of  law  in  respect  to 
trustees  of  insolvent  debtors,  and  the  collection  and  preser- 
vation of  the  property  of  such  debtors  and  the  concealment 
and  discovery  thereof,  and  the  means  of  enforcing  such  dis- 
covery, are  applicable  to  receivers  so  appointed.'  And  they 
have  the  same  power  to  settle  any  controversy  arising  be- 
tween them  and  any  debtor  or  creditor  of  the  corporation 
by  a  reference  as  trustees  of  insolvent  debtors  have.  And 
the  same  proceedings  for  that  purpose  may  be  had.2 

The  receivers  must  call  a  general  meeting  of  the  credit- 
ors of  such  corporation  within  four  months  from  the  time 
of  their  appointment,  when  all  accounts  and  demands  for 
and  against  such  corporation,  and  all  its  open  and  subsisting 
contracts,  must  be  ascertained  and  adjusted  as  far  as  may  be, 
and  the  amount  of  moneys  in  the  hands  of  the  receivers  de- 
clared.3 

If  there  are  any  open  and  subsisting  engagements  or 
contracts  of  such  corporation  which  are  in  the  nature  of  in- 
surances or  contingent  engagements  of  any  kind,  the  receiv- 
ers may,  with  the  consent  of  the  party  holding  such  engage- 
ments, cancel  and  discharge  the  same  by  refunding  to  such 
party  the  premium  or  consideration  paid  thereon  by  such 
corporation,  or  so  much  thereof  as  may  be  in  the  same  pro- 
portion to  the  time  which  shall  remain  of  any  risk  assumed 
by  such  engagement,  as  the  whole  premium  bore  to  the 
whole  term  of  such  risk.  And  upon  such  amount  being 
paid  by  such  receivers  to  the  person  holding,  or  being  the 
legal  owner  of  such  engagement,  it  will  be  deemed  cancelled 
and  discharged  as  against  the  receivers  ; 4  and  they  must  re- 
tain in  their  hands  a  sufficient  amount. to  pay  such  sums.5 

If  any  suit  be  pending  against  the  corporation  or  against 
the  receivers  for  any  demand,  they  may  retain  the  propor- 
tion which  would  belong  to  such  demand  if  established,  and 

1  Rev.   Stat.,    part  ill.   chap.  viii.  3  Id.  ^  74. 
title  4,  art.  3,  §  72.  4  Id.  ?  75. 

2  Id.  §  73-  5  Id.  g  77- 


DISSOLUTION.  309 

the  necessary  costs  and  proceedings,  to  be  applied  according 
to  the  event  of  such  suit,  or  to  be  distributed  in  a  second  or 
other  dividend.' 

The  receivers  must  distribute  the  residue  of  the  moneys 
in  their  hands  among  all  those  who  have  exhibited  their 
claims  as  creditors  and  whose  debts  have  been  ascertained, 
as  follows  : 

1.  All  debts  entitled  to  a  preference  under  the  laws  of 
the  United  States. 

2.  Judgments  actually  obtained  against  such  corporation 
to  the  extent  of  the  value  of  the  real  estate  on  which  they 
are  respectively  liens. 

3.  All  other  creditors  of  such  corporation  in  proportion 
to  their  respective  demands  without  giving  any  preference 
to  debts  due  on  specialties.3 

If  the  whole  of  such  estate  be  not  distributed  on  the 
first  dividend,  the  receivers  within  one  year  thereafter  and 
within  sixteen  months  after  their  appointment  must  make  a 
second  dividend  of  all  the  moneys  in  their  hands  among  the 
creditors  entitled  thereto.  Notice  of  which  and  that  the 
same  will  be  a  final  dividend  must  be  inserted  once  in  each 
week  for  three  weeks  in  the  state  paper  and  in  a  newspaper 
printed  in  the  county  where  the  principal  place  of  business  of 
such  corporation  was  situated.3  And  such  dividend  must  be 
made  in  all  respects  in  the  same  manner  as  the  first  dividend, 
except  that  every  creditor  who  has  neglected  to  exhibit  his 
demand  before  the  first  dividend,  and  who  may  deliver  his 
account  to  the  receiver  before  such  second  dividend,  is  en- 
titled to  receive  the  sum  he  would  have  been  entitled  to 
on  the  first  dividend  before  any  distribution  is  made  to  the 
other  creditors.' 

After  such  second  dividend  has  been  made  the  receivers 
will  not  be  answerable  to  any  creditor  of  such  corporation, 

1  Rev.    Stat.,   part    III.    chap.   viii.  3  Id.  §  So. 
title  4,  art.  3,  §  7S.                                           *  Id.  §  81. 

2  Id.  §  79. 


3IO  THE    LAW    OF   CORPORATIONS. 

or  to  any  person  having  claims  against  it  by  virtue  of  any 
open  or  subsisting  engagement,  unless  such  demands  have 
been  exhibited  and  the  engagements  upon  which  such  claims 
are  founded  have  been  presented  to  the  receivers  in  detail 
and  in  writing,  before  or  at  the  time  specified  in  their  notice 
of  a  second  dividend.'  And  if  after  the  second  dividend  is 
made  there  remains  any  surplus  in  the  hands  of  the  receiv- 
ers, they  must  distribute  the  same  among  the  stockholders 
of  the  corporation  in  proportion  to  the  respective  amounts 
paid  in  by  them  severally  upon  their  shares  of  stock.2  And 
when  a«ny  suit,  pending  at  the  time  of  the  second  dividend, 
is  terminated,  they  must  apply  the  moneys  retained  in  their 
hands  for  that  purpose  to  the  payment  of  the  amount  re- 
covered and  their  necessary  charges  and  expenses,  and  if 
nothing  has  been  recovered,  they  must  distribute  such  mon- 
eys after  deducting  their  expenses  and  costs,  among  the 
creditors  and  stockholders  of  the  corporation  in  the  same 
manner  as  directed  in  respect  to  a  second  dividend.3 

All  receivers  are  subject  to  the  control  of  the  court,  and 
may  be  compelled  to  account  at  any  time,  or  may  be  re- 
moved by  the  court,  and  any  vacancy  created  by  such  re- 
moval, by  death  or  otherwise,  may  be  supplied  by  the 
court.4 

Within  three  months  after  the  time  prescribed  for  mak- 
ing a  second  dividend,  the  receivers  must  render  a  full  and 
accurate  account  of  all  their  proceedings  to  the  court  on 
oath,  which  account  will  be  sent  to  a  referee  to  examine  and 
report  thereon.5 

Previous  to  rendering  such  account  the  receivers  must 
insert  a  notice  of  their  intention  to  present  the  same  once 
in  each  week  for  three  weeks  in  the  state  paper  and  the 
newspaper  of  the  county  in  which  notices  of  dividends  are 

1  Rev.   Stat.,   part    III.    chap.   viii.  a  Id.  §  S4. 

title  4,  art.  3,  §  S2.  4  Id.  §  S5. 

-  Id.  §  83.  b  Id.  §  86. 


DISSOLUTION.  311 

required  to  be  inserted,  specifying  the  time  and  place  at 
which  such  account  will  be  rendered.1 

The  referee  will  hear  and  examine  the  proofs,  vouchers 
and  documents  offered  for  or  against  such  account,  and 
report  thereon  fully  to  the  court.2  And  upon  the  coming 
in  of  such  report  the  court  will  hear  the  allegations  of  all 
concerned  therein,  and  allow  or  disallow  such  account,  and 
decree  the  same  to  be  final  and  conclusive  upon  all  the 
creditors  of  such  corporation,  upon  all  persons  who  have 
claims  against  it  upon  any  open  or  subsisting  engagement, 
and  upon  all  its  stockholders.  The  receivers  must  also  from 
time  to  time  account  in  the  same  manner  and  with  the  like 
effect  for  all  moneys  which  may  come  to  their  hands  after 
the  rendering  of  such  account,  and  for  all  moneys  which 
have  been  retained  by  them  for  any  of  the  purposes  before 
specified,  and   must  pay  all  unclaimed  dividends  into  court.3 

Receivers  appointed  in  Proceedings  for  Involuntary  Dissolution. 
— By  the  Repealing  Act  of  1880,  the  provisions  of  the  Re- 
vised Statutes  regulating  the  duties  of  receivers  in  proceed- 
ings brought  against  corporations  in  equity4  were  made 
applicable  to  permanent  receivers  appointed  in  actions 
brought  for  the  involuntary  dissolution  of  corporations.5 

It  was  provided  in  that  section  that  such  a  receiver  should 
possess  all  the  power  and  authority  conferred,  and  be  subject 
to  all  the  obligations  and  duties  imposed,  upon  receivers 
appointed  in  the  case  of  the  voluntary  dissolution  of  a  cor- 
poration. It  was  also  made  his  duty  to  keep  an  account  of 
all  moneys  received  by  him,  and  on  the  first  daysof  Jan.ua  y, 
April,  July,  and  October  in  each  and  every  year  to  make  and 
file  a  written  statement  verified  by  his  oath,  that  such  state- 
ment is  correct  and  true,  showing  the  amount  of  moneys  re- 
ceived by  such  "eceiver,  his  agents  or  attorneys,  the  amount 
he  has  a  right  to  retain,  and  the  items  for  which  he  claims  to 

1  Rev.    Stat.,   part  III.    chap.    viii.  4  Id.   art.   2,  §  42,  as  amended  by 

title  4,  art.  3,  §  87.  Laws  of  1858,  chap.  348. 

'2  Id.  §  88.  6  Laws  of  1&S0,  chap.  245. 

3  Id.  §  So, 


312  THE    LAW    OF   CORPORATIONS. 

retain  the  same,  and  the  distributive  share  due  each  person 
interested  therein,  and  to  pay  such  distributive  share  to  the 
person  or  persons  entitled  thereto  on  demand  at  any  time 
after  such  statement.  Such  account,  statement,  and  all  the 
books  and  papers  of  the  corporation  in  the  hands  of  such 
receiver  must  at  all  reasonable  times  be  open  for  the  inspec- 
tion of  all  persons  having  an  interest  therein.  And  in  case 
of  neglect  or  refusal  to  comply  with  cither  of  the  above  re- 
quirements, or  any  duty  imposed  upon  him  by  statute,  the 
Supreme  Court,  at  either  a  General  or  a  Special  Term,  may, 
upon  the  application  of  the  party  aggrieved,  unless  such 
neglect  or  refusal  is  satisfactorily  explained  to  the  court, 
forthwith  remove  such  receiver  and  appoint  some  suitable 
person  in  his  place  ;  but  such  removal  would  not  vitiate  or 
annul  any  legal  proceedings  had  by  him,  but  they  must  be 
continued  by  his  successor  as  if  no  removal  had  been  made. 
Such  receiver  is  also  liable  to  pay  to  the  party  interested 
interest  at  the  rate  of  ten  percent,  per  annum  on  all  moneys 
due  to  such  party  and  retained  by  him  more  than  one  day 
after  such  demand  is  made. 

Receivers  of  Life-Insurance  Companies. — If  at  any  time  the 
affairs  of  any  life-insurance  company,  which  has  deposited 
securities  under  the  act  for  the  organization  of  such  com- 
panies, appear  in  the  opinion  of  the  Superintendent  of  the 
Insurance  Department  in  such  a  condition  as  to  render 
the  issuing  of  additional  policies  and  annuity  bonds  by  it 
injurious  to  the  public  interest,  the  Superintendent  must 
report  that  fact  to  the  attorney-general,  whose  duty  it 
will  then  be  to  apply  to  the  Supreme  Court  for  an  order  re- 
quiring such  company  to  show  cause  why  its  business  should 
not  be  closed.  The  court  will  thereupon  proceed  to  hear 
the  allegations  and  proofs  of  the  respective  parties,  and  in 
case  it  appear  to  the  satisfaction  of  the  court  that  the  assets 
and  funds  of  the  company  are  not  sufficient  to  justify  the 
further  continuance  of  the  business  of  insuring  lives,  grant- 
ing annuities,  and  incurring  new  obligations  as  authorized  by 


DISSOLUTION.  313 

its  charter,  it  will  issue  an  order  enjoining  and  restraining 
such  company  from  the  further  prosecution  of  its  business, 
and  appoint  a  receiver  of  all  its  assets  and  credits.  Such 
receiver,  upon  filing  his  bond  in  an  amount  and  with  sureties 
approved  by  the  court  conditioned  for  the  faithful  perform- 
ance of  his  duties,  must  take  possession  of  all  the  assets  and 
credits  of  such  company  except  the  securities  deposited  in 
the  Insurance  Department.1 

Immediately  upon  entering  upon  the  duties  of  his  office 
the  receiver  must  appoint  a  competent  actuary  approved  by 
the  Superintendent  of  the  Insurance  Department,  who  must 
make  a  careful  investigation  according  to  the  standard  fixed 
by  the  laws  of  this  state,  into  the  condition  of  the  company, 
and  report  thereon  in  writing  under  oath  to  the  court,  the 
superintendent  and  the  receiver.  And  if  by  such  report  it 
be  found  that  the  securities  deposited  by  the  company  in  the 
Insurance  Department  and  the  assets  and  credits,  including 
all  future  premiums  that  will  mature  on  all  outstanding 
policies  and  other  obligations  of  the  company,  are  sufficient 
under  the  laws  of  this  state  to  pay  all  such  policies,  annuities 
and  obligations  as  they  may  mature,  and  the  legal  costs  and 
expenses  incident  to  the  business,  and  if  such  report  is  con- 
firmed by  the  court,  the  receiver  must  notify  all  the  holders 
of  such  policies,  annuities  and  obligations,  requiring  them  to 
pay  to  him  as  such  receiver  all  premiums  and  ether  pay- 
ments due  or  to  become  due  to  such  company.  Or,  on  the 
confirmation  of  the  report,  the  court  may,  in  its  discretion, 
direct  the  receiver  to  reinsure  all  registered  policies  in  some 
solvent  company  upon  the  execution  by  him  of  an  assign- 
ment to  such  reinsuring  company  of  all  securities  c;i  deposit 
in  trust  for  registered  policy-holders. 

In  case  the  report  shows  that  such  securities,  assets, 
credits  and  premiums  are  not  sufficient  to  pay  the  obliga- 
tions of  the  company  as  they  may  mature  and  the   legal 

1  Laws  of  1S69,  chap.  902,  §  7. 


314  THE    LAW    OF    CORPORATIONS. 

costs  and  expenses  of  the  receivership,  upon  its  confirmation 
by  the  court,  the  court  may  direct  the  conversion  of  the 
securities  held  by  the  superintendent  into  money  for  the 
purpose  of  distribution.  And  the  proceeds  of  such  securi- 
ties, upon  the  order  of  the  court,  will  be  paid  to  the  receiver, 
and  must  be  applied  by  him  under  the  direction  of  the  court 
to  the  payment  of  the  registered  policy-holders  in  propor- 
tion to  the  net  value  of  their  policies,  and  to  the  registered 
annuities  of  such  companies  in  proportion  to  the  then  pres- 
ent value  of  their  respective  annuities  ;  and  the  surplus,  if 
any,  with  all  the  other  assets  of  the  company,  must  be  ap- 
plied to  the  payment  of  all  the  just  debts  of  such  company 
incurred  in  the  conducting  and  carrying  on  of  its  lawful 
business.1 

If  the  business  of  the  company  is  continued  as  above 
provided,  and  the  receipts  are  in  excess  of  the  sums  required 
to  meet  its  obligations,  and  such  excess  amounts  to  twenty- 
five  thousand  dollars,  it  must  be  invested  in  such  securities 
as  are  authorized  to  be  deposited  in  the  insurance  depart- 
ment and  be  there  deposited. 

If  at  any  time  the  funds  in  the  hands  of  the  receiver  are 
not  sufficient  to  meet  the  obligations  of  the  company  as 
they  mature  he  must  notify  the  superintendent  of  the  amount 
required  to  meet  the  deficiency,  and  the  superintendent  will 
sell  such  portion  of  the  securities  as  may  be  required  to  meet 
such,  matured  obligations,  and  pay  the  proceeds  to  the  re- 
ceiver.2 

Such  a  receiver  has  all  the  powers  incident  to  the  suc- 
cessful management  of  the  affairs  of  the  company,  and  to 
that  end,  authority  to  purchase  policies  issued  by  the  com- 
pany, to  make  any  other  compromises  in  the  settlement  of 
its  outstanding  obligations,  and  to  use  the  corporate  seal  of 
the  company  whenever  necessary  in  the  transaction  of  the 
business  of  his  receivership.3 

1  Laws  of  1S69,  chap.  902,  §  S,  as  -  Id.  §  9. 

amended  by  Laws  of  18S0,  chap.  16S.  3  Id.  §  12. 


DISSOLUTION.  315 

The  receiver  of  any  such  company  may  upon  the  written 
consent  of  the  Superintendent  of  the  Insurance  Department 
and  the  attorney-general  reinsure  the  whole  of  the  policy 
obligations  of  such  company  in  any  solvent  company  or 
companies  organized  under  the  laws  of  this  state,  whenever 
the  assets  of  the  company  of  which  he  is  receiver  are  suffi- 
cient to  effect  such  reinsurance  ;  and  whenever  the  assets 
are  not  sufficient,  he  ma}-  with  like  consent  reinsure  a  per- 
centage of  each  and  every  policy  to  the  extent  that  the  as- 
sets of  the  company  may  be  sufficient  to  effect  such  rein- 
surance. It  is  provided,  however,  that  no  such  contract 
may  be  entered  into  except  in  pursuance  of  an  order  of  the 
court  in  which  such  receiver  was  appointed,  directing  such 
reinsurance  and  establishing  the  general  form  of  the  con- 
tract to  effect  the  same.' 

Receivers  of  Fire  and  Inland  Navigation  Insurance  Companies. 

The  receiver  of  any  fire,  or  fire  and  inland-navigation  insur- 
ance company  organized  under  the  laws  of  this  state,  on  the 
receipt  by  him  of  any  policy,  and  at  the  request  of  the 
policy-holder  in  writing,  may  cancel  the  policy  and  issue  in 
lieu  thereof  a  certificate  of  indebtedness  as  such  receiver  for 
the  amount  of  the  premium  paid  less  the  proportional  pre- 
mium for  the  expired  time  of  the  full  term  for  which  the 
policy  had  been  issued  or  renewed  ;  and  upon  the  receipt  of 
the  certificate  of  indebtedness  by  the  policy-holder  the  policy 
becomes  null  and  void,  anything  in  the  policy  to  the  con- 
trary notwithstanding. 

It  is  the  duty  of  the  receiver  to  report  among  the  liabilities 
of  the  company  in  his  statements  to  the  Insurance  Depart- 
ment the  total  amount  of  the  outstanding  certificates  of  in- 
debtedness not  cancelled  at  the  date  of  making  such  state- 
ment.2 

Statements  Required. — It  is  the  duty  of  all  receivers  of  in- 
surance companies   during   the   month   of   January  of  each 

1  Laws  of  1877,  chap.  229,  §  3.  -  Laws  of  1SS0,  chap,  no,  §  4. 


316  THE   LAW   OF   CORPORATIONS. 

year  and  at  any  other  time  when  required  by  the  Superin- 
tendent of  the  Insurance  Department  to  make  and  file  annual 
and  other  statements  of  their  assets  and  liabilities  and  of 
their  income  and  expenditures  in  the  same  manner  and  form 
and  under  the  same  penalties  as  the  officers  of  such  compa- 
nies are  required  to  make  statements  to  the  Insurance  De- 
partment.1 

Reports  by  Receivers. — It  is  the  dut)'  of  every  receiver  of 
an  insurance,  banking  or  railroad  corporation,  or  trust  com- 
pany, to  present  every  six  months  to  the  Special  Term  of  the 
Supreme  Court  held  in  the  judicial  district  wherein  the 
place  of  trial  or  venue  of  the  action  or  special  proceeding 
in  which  he  was  appointed  may  then  be,  on  the  first  day  of 
its  first  sitting  after  the  expiration  of  such  time,  and  to  file 
a  copy  of  the  same,  if  a  receiver  of  a  banking  or  trust  com- 
pany, with  the  Superintendent  of  the  Banking  Department, 
and  if  a  receiver  of  an  insurance  company,  with  the  Super- 
intendent of  the  Insurance  Department,  and  in  each  case 
with  the  attorney-general,  an  account  exhibiting  in  detail 
the  receipts  of  his  trust,  and  the  expenses  paid  and  incurred 
therein,  during  the  preceding  six  months.  No  such  receiver 
is  allowed  to  pay  to  any  attorney  or  counsel  any  costs,  fees 
or  allowances  until  the  amounts  thereof  have  been  stated  to 
the  Special- Term  in  the  above  manner  as  expenses  incurred, 
and  have  been  approved  by  that  court,  by  an  order  duly 
entered,  and  such  order  is  subject  to  review  by  the  General 
Term  and  the  Court  of  Appeals,  on  an  appeal  being  taken 
by  any  party  aggrieved  thereby. 

The  attorney-general  must  be  given  eight  days'  notice  in 
writing  of  the  intention  to  present  such  an  account ;  and  he 
is  required  to  examine  the  books  and  accounts  of  such  re- 
ceiver at  least  once  a  year.2 

All  receivers  of  insolvent  corporations  who  are  required 
to  make  and  file  reports  of  their  proceedings  must  at  the  time 

1  Laws  of  1867,  chap.  709,  §  2.  "  Laws  of  1SS3,  chap.  378,  §  4. 


DISSOLUTION.  317 

of  making  and  filing  such  reports  serve  a  copy  thereof  upon 
the  attorney-general,  and  all  receivers  of  corporations  under 
the  supervision  of  the  Banking  Department  must  on  the  first 
day  of  January  and  July  in  each  year  file  with  the  Super- 
intendent of  the  Banking  Department  a  report  verified  by 
oath  in  such  form  as  he  may  prescribe,  showing  the  con- 
dition of  their  respective  trusts.' 

In  case  any  receiver  of  an  insolvent  corporation  neglects 
to  make  and  file  a  report  of  his  proceedings  for  thirty  days 
after  the  time  he  is  required  by  law  to  make  and  file  such 
report,  or  neglects  for  the  same  length  of  time  to  serve  a 
copy  thereof  on  the  attorney-general,  the  latter  may  make 
a  motion  in  the  Supreme  Court  for  an  order  compelling  the 
making  and  filing  and  serving  of  a  copy  on  him  of  such  re- 
port, or  for  the  removal  of  such  receiver  from  his  office." 

Compensation  of  Receivers. —  Ever)r  receiver  may  be  al- 
lowed as  compensation  for  his  services  as  such  receiver  five 
per  cent,  for  the  first  one  hundred  thousand  dollars  received 
and  paid  out,  and  two  and  a  half  percent,  on  all  sums  re- 
ceived and  paid  out  in  excess  of  one  hundred  thousand  dol- 
lars. But  no  receiver  may  be  allowed,  or  may  receive  from 
such  percentages  or  otherwise,  for  his  services  for  any  one 
year,  any  greater  sum  or  compensation  than  twelve  thousand 
dollars,  nor  for  any  period  less  than  one  year  more  than  at 
the  rate  of  twelve  thousand  dollars  per  year.  And  where 
more  than  one  receiver  is  appointed  such  compensation  must 
be  divided  between  the  receivers.3 

The  above  act  applies  only  to  receivers  of  corporations 
appointed  in  proceedings  in  bankruptcy,  and  not  to  one 
appointed  in  an  action  to  foreclose  a  mortgage.  The  allow- 
ance of  commissions  to  such  a  receiver  is  governed  by  the 
provisions  of  the  Code  providing  for  the  allowances  of  com- 
pensation by  the  court  or  a  judge  thereof.4 

1  Laws  of  1SS0,  chap.  537,  §  1.  amended  by  Laws  1SS6,  chap.  275. 

-  Id.  £2.  *  U.    S.  Trust  Co.  v.  N.   >".,  West 

z  Laws  of  1SS3,  chap.  37S,  $  2,  as       Shore&B.  A'.  Co.,  101  N.  V.  478. 


31 8  THE   LAW    OF   CORPORATIONS. 

Where  upon  the  death  or  removal  of  a  receiver  a  new 
receiver  is  appointed  the  new  receiver  is  not  entitled  to  a 
full  commission  upon  the  funds  collected  and  turned  over 
to  him  by  his  predecessor.  The  law  contemplates  but  one 
commission,  which  is  the  entire  compensation  provided  for 
collecting  and  disbursing  the  funds.1 

Wages  of  Operatives  Preferred. —  It  is  provided  that  where 
a  receiver  of  a  corporation  created  or  organized  under  the 
laws  of  this  state,  and  doing  business  therein,  other  than  in- 
surance and  moneyed  corporations,  is  appointed,  the  wages 
of  the  employees,  operatives  and  laborers  thereof  shall  be 
preferred  to  every  other  debt  or  claim  against  such  corpora- 
tion, and  shall  be  paid  by  the  receiver  from  the  moneys 
of  such  corporation  which  shall  first  come  to  his  hands.'2 

Whether  these  provisions  would  apply  in  the  case  of  a 
receiver  appointed  in  foreclosure  proceedings  has  not  been 
determined.3  But  following  the  decisions  regarding  the 
compensations  of  receivers  it  would  seem  not  to  apply.4 

It  will  be  noticed  that  the  language  of  the  act  differs 
from  the  language  in  most  of  the  acts  for  the  formation  of 
corporations  making  stockholders  liable  to  the  laborers  in 
certain  events.  In  these  acts  the  liability  is  generally  to  the 
"  laborers,  servants  and  apprentices,"  while  here  it  is  to  the 
"  employees,  operatives  and  laborers."  In  Gurncyv.  Atlantic 
and  Great  Western  Railway  Company''  it  was  held  that  the 
term  "  employees"  occurring  in  an  order  directing  a  receiver 
to  pay  the  "  employees"  of  a  company,  was  broad  enough  to 
include  payment  to  the  counsel  of  the  company  for  services 
rendered. 

But  it  was  held  in  People  v.  Remington'  that  the  super- 
intendent and  the  attorney  of  a  company  did  not  come  with- 

1  Attorney-General    v.    Continental  4  U.  S.  Trust  Co.  v.  N.    V.,   West 
Life  Ins.  Co.,  32  Hun,  223.                         Shore  cV  B.  K.  Co.,  101  N.  Y.  47S. 

2  Laws  of  1S85,  chap.  376.  5  5S  N.  Y.  358. 
;;  Metropolitan    Trust  Co.  v.    Tona-  6  45  Hun,  329. 

■wanda  V.  &  C.R.  R.  Co.,  103  N.Y.  245. 


DISSOLUTION. 


J*? 


iii  the  meaning  of  this  statute.  But  in  a  later  case'  it  was 
held  that  one  who  was  employed  to  assist  the  general  manager 
of  a  corporation  in  keeping  its  books,  to  clean  the  office,  and 
ship  goods,  did  come  within  its  provisions,  and  was  entitled 
to  the  preference  at  the  hands  of  a  receiver.  In  a  still  later 
case2  it  was  held  that  a  contractor  who  hired  and  paid  labor- 
ers who  were  generally  governed  by  the  rules  in  force  in  the 
factory  of  the  company,  was  not  within  its  provisions. 

In  the  first  of  the  above  cases3  it  was  held  [Merwin,  J., 
dissenting]  that  claims  of  laborers  assigned  before  the  ap- 
pointment of  a  receiver  were  not  entitled  to  a  preference 
under  the  act,  but  that  after  his  appointment  the  preference 
springs  into  existence  and  becomes  a  legal  right,  which  is 
assignable.  It  was  also  held  that  where  the  laborers  had  re- 
ceived notes  and  had  transferred  them  to  third  parties  who 
then  held  them,  such  holders  were  not  entitled  to  a  prefer- 
ence. 

1  Brown  v.  A.  B.  C.  Fence  Co.,  52       Supp.  796;  53  H'in,  638. 
Hun,  151.  3  Peoplev.  Remington,  45  Hun,  329. 

-  People   v.   Remington,    6     N.   Y. 


APPENDIX   A. 

Laws  of  1848,  Chap.  40 — An  act  to  authorize  the 
formation  of  corporations  fdr  manufacturing, 
mining,  mechanical,  chemical,  agricultural,  hor- 
ticultural, medical  or  curative,  mercantile  or 
c<  immercial  purposes. 

Corporations,  how  formed. SECTION  I.  At  any  time  here- 
after a:;y  three  or  more  persons  who  may  desire  to  form  a 
company  for  the  purpose  of  carrying  on  any  kind  of  manu- 
facturing, mining,  mechanical  or  chemical  business,  or  the 
business  of  printing,  publishing,  or  selling  books,  pamphlets 
or  newspapers,  or  advertising  the  same  or  other  articles,  or 
for  the  purpose  of  purchasing,  taking,  holding  and  possess- 
ing real  estate  and  buildings,  and  selling,  leasing  and  im- 
proving the  same,  or  the  business  of  making  butter,  cheese, 
concentrated  or  condensed  milk,  or  any  other  products 
of  the  dairy,  or  the  business  of  erecting  buildings  for 
church  sheds  or  laundry  purposes,  and  the  carrying  on  of 
laundry  business,  or  the  business  of  slaughtering  ani- 
mals, or  for  the  purpose  of  towing  or  propelling  canal 
boats,  vessels,  rafts  or  floats  on  the  canals  and  navigable 
rivers  of  the  State  of  New  York,  by  animal  or  steam  power, 
or  for  the  purpose  of  buying,  storing,  selling  or  shipping 
coal,  merchandise  and  farm  produce,  their  operations  not  to 
be  confined  to  the  county  in  which  their  certificates  shall 
be  filed,  or  the  supplying  of  hot  water  or  hot  air  or  steam 
for  motive  power,  heating,  cooking  or  other  useful  applica- 
tions in  the  streets  and  public  and  private  buildings  of  any 
city,  village  or  town  in  this  state,  or  the  business  of  buying, 
breeding,  grazing,  pasturing,  dealing  in  and  selling  cattle, 
sheep,  hogs,  horses  and  other  livestock  in  the  United  States 
of  America,  British  North  America  and  elsewhere,  may 
make,  sign  and  acknowledge,  before  some  officer  competent 
to  take  the  acknowledgment    of  deeds,  and  hie  in  the  office 


3-22  THE   LAW   OF   CORPORATIONS. 

of  the  clerk  of  the  county  in  which  the  business  of  the  com- 
pany shall  be  carried  on,  and  a  duplicate  thereof  in  the 
office  of  the  secretary  of  state,  a  certificate  in  writing,  in 
which  shall  be  stated  the  corporate  name  of  said  com- 
pany, and  the  objects  for  which  the  company  shall  be 
formed,  the  amount  of  the  capital  stock  of  said  company, 
the  time  of  its  existence  (not  to  exceed  fifty  years),  the 
number  of  shares  of  which  the  said  stock  shall  consist,  the 
number  of  trustees  and  their  names,  who  shall  manage  ti  : 
concerns  of  said  company  for  the  first  year,  and  the  name 
of  the  town  and  county  in  which  the  operations  of  said 
company  are  to  be  carried  on. 

No  company  organized  under  this  act  for  the  purpose  of 
taking,  purchasing,  holding  or  possessing  real  estate  and 
buildings,  and  selling,  leasing  and  improving  the  same,  shall 
be  permitted  to  purchase  and  hold  real  estate  to  the  value 
of  more  than  one  million  dollars ;  but  this  act  shall  not 
be  deemed  to  repeal  or  affect  in  any  way  any  act  heretofore 
passed  amendatory  of  or  supplementary  to  the  said  act  of 
February  seventeen,  eighteen  hundred  and  forty-eight,  ex- 
cept as  herein  provided.  \TJuis  amended  by  Laws  of  1888, 
chap,  313.] 

When  to  become  Bodies  Corporate.~*-§  2.  When  the  certificate 
shall  have  been  filed  as  aforesaid,  the  persons  who  shall 
have  signed  and  acknowledged  the  same,  and  their  succes- 
sors, shall  be  a  body  politic  and  corporate,  in  fact  and  in 
name,  by  the  name  stated  in  such  certificate  ;  and  by  that 
name  have  succession,  and  shall  be  capable  of  suing  and 
being  sued  in  any  court  of  law  oi  equity  in  this  state, 
and  they  and  their  successors  may  have  a  common  seal, 
and  may  make  and  alter  the  same  at  pleasure  ;  and  they 
shall,  by  their  corporate  name,  be  capable  in  law  of  pur- 
chasing, holding  and  conveying  any  real  and  personal  estate 
whatever  which  may  be  necessary  to  enable  the  said  com- 
pany to  carry  on  their  operations  named  in  such  certifi- 
cate, but  shall  not  mortgage  the  same  or  give  any  lien 
thereon. 

Trustees  to  be  Elected. — §3.  The  stock,  property  and  con- 
cerns of  such  company  shall  be  managed  by  not  less  than 


APPENDIX   A.  323 

three  nor  more  than  thirteen  trustees,  who  shall  respectively 
be  stockholders  in  such  company,  and  a  majority  of  whom 
shall  be  citizens  and  residents  of  this  state,  who  shall,  ex- 
cept the  first  year,  be  annually  elected  by  the  stockholders, 
at  such  time  and  place  as  shall  be  directed  by  the  by-laws 
of  the  company  ;  and  public  notice  of  the  time  and  place 
of  holding  such  election  shall  be  published  not  less  than  ten 
days  previous  thereto,  in  the  newspaper  printed  nearest  to 
the  piace  where  the  operations  of  the  said  company  shall  be 
carried  on  ;  and  the  election  shall  be  made  by  such  of  the 
stockholders  as  shall  attend  for  that  purpose,  either  in  per- 
son or  by  proxy.  All  elections  shall  be  by  ballot,  and  each 
stockholder  shall  be  entitled  to  as  many  votes  as  he  owns 
shares  of  stock  in  the  said  company,  and  the  persons  receiv- 
ing the  greatest  number  of  votes  shall  be  trustees  ;  and  when 
any  vacancy  shall  happen  among  the  trustees,  by  death,  res- 
ignation or  otherwise,  it  shall  be  filled  for  the  remainder  of 
the  year  in  such  manner  as  may  be  provided  for  by  by- 
laws of  the  said  company.  {Thus  amended  by  Lazvs  of  1883, 
chap.  232.] 

Election  may  be  Held  on  any  Day. — §  4.  In  case  it  shall  happen 
at  any  time  that  an  election  of  trustees  shall  not  be  made 
on  the  day  designated  by  the  by-laws  of  said  company, 
when  it  ought  to  have  been  made,  the  company  for  that 
reason  shall  not  be  dissolved,  but  it  shall  be  lawful  on  any 
other  da)-  to  hold  an  election  for  trustees,  in  such  manner 
as  shall  be  provided  for  by  the  said  by-laws,  and  all  acts  of 
trustees  shall  be  valid  and  binding  as  against  such  company, 
until  their  successors  shall  be  elected. 

Officers. — §  5.  There  shall  be  a  president  of  the  companv, 
who  shall  be  designated  from  the  number  of  the  trustees, 
and  also  such  subordinate  officers  as  the  company  by  its  by- 
laws may  designate,  who  may  be  elected  or  appointed,  and 
required  to  give  such  security  for  the  faithful  performance 
of  the  duties  of  their  office  as  the  company  by  its  by-laws 
may  require.  , 

Trustees  to  make  Calls  on  Stockholders. — ^  6.  It  shall  be  lawful 
for  the  trustees  to  call  in  and  demand  from  the  stockholders, 
respectively,  all  such  sums  of  money  by  them  subscribed,  at 


324  THE   LAW   OF   CORPORATIONS. 

such  times  and  in  such  payments  or  instalments  as  the 
trustees  shall  deem  proper,  under  the  penalty  of  forfeiting 
the  shares  of  stock  subscribed  for,  and  all  previous  payments 
made  thereon,  if  payment  shall  not  be  made  by  the  stock- 
holders within  sixty  days  after  a  personal  demand  or  notice 
requiring  such  payment  shall  have  been  published  for  six 
successive  weeks  in  the  newspaper  nearest  to  the  place 
where  the  business  of  the  company  shall  be  carried  on  as 
aforesaid. 

To  make  By-laws. — §  7.  The  trustees  of  such  company  shall 
have  power  to  make  such  prudential  by-laws  as  they  shall 
deem  proper  for  the  management  and  disposition  of  the 
stock  and  business  affairs  of  such  company,  not  inconsistent 
with  the  laws  of  this  state,  and  prescribing  the  duties  of 
officers,  artificers,  and  servants  that  may  be  employed  ;  for 
the  appointment  of  all  officers,  and  for  carrying  on  all  kinds 
of  business  within  the  objects  and  purposes  of  such  com- 
pany. 

Stock  Transferable. — §  8.  The  stock  of  such  company  shall 
be  deemed  personal  estate,  and  shall  be  transferable  in  such 
manner  as  shall  be  prescribed  by  the  by-laws  of  the  com- 
pany ;  but  no  shares  shall  be  transferable  until  all  previous 
calls  thereon  shall  have  been  fully  paid  in,  or  shall  have  been 
declared  forfeited  for  the  non-payment  of  calls  thereon ; 
and  "it  shall  not  be  lawful  for  such  company  to  use  any  of 
their  funds  in  the  purchase  of  any  stock  in  any  other  cor- 
poration. 

Copy  of  Certificate  to  be  Evidence. — §  9.  The  Copy  of  any  cer- 
tificate of  incorporation  filed  in  pursuance  of  this  act,  certi- 
fied by  the  county  clerk  or  his  deputy  to  be  a  true  copy, 
and  of  the  whole  of  such  certificate,  shall  be  received  in  all 
courts  and  places,  as  presumptive  legal  evidence  of  the  facts 
therein  stated. 

Liability  of  Stockholders. — §  io.  All  the  stockholders  of  every 
company  incorporated  under  this  act  shall  be  severally  in- 
dividually liable  to  ijie  creditors  of  the  company  in  which 
they  are  stockholders,  to  an  amount  equal  to  the  amount  of 
stock  held  by  them  respectively  for  all  debts  and  contracts 
made  by  such  company,  until  the  whole  amount  of  capital 


APPENDIX    A.  325 

stock  fixed  and  limited  by  such  company  shall  have  been 
paid  in,  and  a  certificate  thereof  shall  have  been  made  and 
recorded  as  prescribed  in  the  following  section  ;  and  the 
capital  stock,  so  fixed  and  limited,  shall  all  be  paid  in,  one- 
half  thereof  within  one  year  and  the  other  half  thereof  within 
two  years  from  the  incorporation  of  said  company,  or  such 
corporation  shall  be  dissolved. 

Certificate  of  the  Payment  of  Stock  to  be  filed. — ,^  II.  The 
president  and  a  majority  of  the  trustees,  within  thirty  days 
after  the  payment  of  the  last  instalment  of  the  capital 
stock,  so  fixed  and  limited  by  the  company,  shall  make  a 
certificate  stating  the  amount  of  the  capital  so  fixed  and 
paid  in  ;  which  certificate  shall  be  signed  and  sworn  to  by 
the  president  and  a  majority  of  the  trustees ;  and  they  shall, 
within  the  said  thirty  days,  record  the  same  in  the  office  of 
the  county  clerk  of  the  count}'  wherein  the  business  of  the 
said  company  is  carried  on. 

Report. — §  12.  Every  such  company  shall  within  twenty 
days  from  the  first  day  of  January,  if  a  year  from  the 
time  of  filing  of  the  certificate  of  incorporation  shall  then 
have  expired,  and,  if  so  long  a  time  shall  not  have  expired, 
then  within  twenty  days  from  the  first  clay  of  January  in 
each  year  after  the  expiration  of  a  year  from  the  time  of 
filing  such  certificate,  make  a  report  which  shall  be  pub- 
lished in  some  newspaper  published  in  the  town,  city  or 
village,  or  if  there  be  no  newspaper  published  in  said  town, 
city  or  village,  then  in  some  newspaper  published  nearest 
the  place  where  the  business  of  the  company  is  carried  on, 
which  shall  state  the  amount  of  capital,  and  of  the  propor- 
tion actually  paid  in,  and  the  amount  of  its  existing  debts, 
which  report  shall  be  signed  by  the  president  and  a  major- 
ity of  the  trustees,  and  shall  be  verified  by  the  oath  of  the 
president  or  secretary  of  said  company,  and  filed  in  the 
office  of  the  clerk  of  the  county  where  the  business  of  the 
company  shall  be  carried  on,  and  if  any  of  said  companies 
shall  fail  so  to  do,  all  the  trustees  of  the  company  shall  be 
jointly  and  severally  liable  for  all  the  debts  of  the  company 
then  existing,  and  for  all  that  shall  be  contracted  before 
such  report  shall  be  made  ;  but  whenever  under  this  section 


326  THE   LAW   OF   CORPORATIONS. 

a  judgment  shall  be  recovered  against  a  trustee  severally, 
all  of  the  trustees  of  the  company  shall  contribute  a  ratable 
share  of  the  amount  paid  by  such  trustee  on  such  judgment, 
and  such  trustee  shall  have  a  right  of  action  against  his  co- 
trustees, jointly  or  severally,  to  recover  from  them  their 
proportion  of  the  amount  so  paid  on  such  judgment ;  pro- 
vided that  nothing  in  this  act  contained  shall  effect1  any 
action  now  pending.  [Thus  amended  by  Laws  of  1875, 
chap.  510.] 

Provision  relative  to  Dividends. §  1 3.    If   the  trustees  of  any 

such  company  shall  declare  and  pay  any  dividend  when  the 
company  is  insolvent,  or  any  dividend,  the  payment  of  which 
would  render  it  insolvent,  or  which  would  diminish  the 
amount  of  its  capital  stock,  they  shall  be  jointly  and  sever- 
ally liable  for  all  the  debts  of  the  company  then  existing, 
and  for  all  that  shall  be  thereafter  contracted,  while  they 
shall  respectively  continue  in  office  :  Provided,  That  if  any 
of  the  trustees  shall  object  to  the  declaring  of  such  dividend 
or  to  the  payment  of  the  same,  and  shall  at  any  time  be- 
fore the  time  fixed  for  the  payment  thereof  file  a  certificate 
of  their  objection  in  writing  with  the  clerk  of  the  company 
and  with  the  clerk  of  the  county,  they  shall  be  exempt  from 
the  said  liability. 

Stock  to  be  Paid  in  Cash. — §  14.  Nothing  but  money  shall  be 
considered  as  payment  of  any  part  of  the  capital  stock,  and 
no  loan  of  money  shall  be  made  by  any  such  company  to 
any  stockholder  therein  ;  and  if  any  such  loan  shall  be  made 
to  a  stockholder,  the  officers  who  shall  make  it,  or  who  shall 
assent  thereto,  shall  be  jointly  and  severally  liable  to  the 
extent  of  such  loan  and  interest,  for  all  the  debts  of  the 
company  contracted  before  the  repayment  of  the  sum  so 
loaned. 

Provision  respecting  False  Certificate  or  Report. — §  I  5.  If  any 
certificate  or  report  made,  or  public  notice  given,  by  the 
officers  of  any  such  company,  in  pursuance  of  the  provisions 
of  this  act,  shall  be  false  in  any  material  representation,  all 
the  officers  who  shall  have  signed  the   same,  knowing  it  to 

1  So  in  the  original. 


APPENDIX    A.  327 

be  false,  shall  be  jointly  and  severally  liable  for  all  the  debts 
of  the  company  contracted  while  they  are  stockholders  or 
officers  thereof. 

Provision  respecting  Stock  held  by  Executors,  etc.  —  £  1 6.  No 
person  holding  stock  in  any  such  com  pan}-,  as  executor, 
administrator,  guardian  or  trustee,  and  no  person  holding 
such  stock  as  collateral  security,  shall  be  personally  subject 
to  any  liability  as  stockholder  of  such  company  ;  but  the 
person  pledging  such  stock  shall  be  considered  as  holding 
the  same,  and  shall  be  liable  as  a  stockholder  accordingly, 
and  the  estates  and  funds  in  the  hands  of  such  executor, 
administrator,  guardian,  or  trustee  shall  be  liable  in  like 
manner  and  to  the  same  extent  as  the  testator  or  intestate, 
or  the  ward  or  person  interested  in  such  trust  fund  would 
have  been,  if  he  had  been  living  and  competent  to  act,  and 
held  the  same  stock  in  his  own  name. 

Executors,  etc.,  to  Vote  at  Meetings. — §  I  J.  Every  such  exec- 
utor,  administrator,  guardian  or  trustee  shall  represent  the 
share  of  stock  in  his  hands  at  all  meetings  of  the  company, 
and  may  vote  accordingly  as  a  stockholder ;  and  every 
person  who  shall  pledge  his  stock  as  aforesaid  may  neverthe- 
less represent  the  same  at  all  such  meetings,  and  may  vote 
accordingly  as  a  stockholder. 

Liability  of  Stockholders. — §  1 8.  The  stockholders  of  any 
company  organized  under  the  provisions  of  this  act  shall 
be  jointly  and  severally  individually  liable  for  all  debts  that 
may  be  due  and  owing  to  all  their  laborers,  servants  and 
apprentices,  for  services  performed  for  such  corporation. 

This  Act  may  be  Altered  or  Repealed. — §  19.  The  legislature 
may  at  any  time  alter,  amend,  or  repeal  this  act,  or  may 
annul  or  repeal  any  incorporation  formed  or  created  under 
this  act;  but  such  amendment  or  repeal  shall  not,  nor  shall 
the  dissolution  of  any  such  company,  take  away  or  impair 
any  remedy  given  against  any  such  corporation,  its  stock- 
holders or  officers,  for  any  liability  which  shall  have  been 
previously  incurred. 

Companies  may  Increase  or  Diminish  Stock. — s;  20.  Any  corpo- 
ration or  company  heretofore  formed,  either  by  special  act 
or  under  the  general   law,  and   now   existing  lor  any  manu- 


328  THE    LAW   OF   CORPORATIONS. 

facturing,  mining,  mechanical  or  chemical  purposes,  or  any 
company  which  may  be  formed  under  this  act,  may  increase 
or  diminish  its  capital  stock  by  complying  with  the  provi- 
sions of  this  act  to  any  amount  which  may  be  deemed  suffi- 
cient and  proper  for  the  purposes  of  the  corporation,  and 
may  also  extend  its  business  to  any  other  manufacturing, 
mining-,  mechanical  or  chemical  business,  subject  to  the  pro- 
visions  and  liabilities  of  this  act.  But  before  any  corpora- 
tion shall  be  entitled  to  diminish  the  amount  of  its  capital 
stock,  if  the  amount  of  its  debts  and  liabilities  shall  exceed 
the  amount  of  capital  to  which  it  is  proposed  to  be  reduced, 
such  amount  of  debts  and  liabilities  shall  be  satisfied  and 
reduced  so  as  not  to  exceed  such  diminished  amount  of 
capital ;  and  any  existing  company,  heretofore  formed  under 
the  general  law,  or  any  special  act,  may  come  under  and 
avail  itself  of  the  privileges  and  provisions  of  this  act,  by 
complying  with  the  following  provisions,  and  thereupon  such 
company,  its  officers  and  stockholders,  shall  be  subject  to 
all  the  restrictions,  duties  and  liabilities  of  this  act. 

Notice  thereof  to  be  given. — §  2i.  Whenever  any  company 
shall  desire  to  call  a  meeting  of  the  stockholders,  for  the 
purpose  of  availing  itself  of  the  privileges  and  provisions  of 
this  act,  or  for  increasing  or  diminishing  the  amount  of  its 
capital  stock,  or  for  extending  or  changing  its  business,  it 
shall  be  the  duty  of  the  trustees  to  publish  a  notice  signed 
by  at  least  a  majority  of  them,  in  a  newspaper  in  the  county, 
if  any  shall  be  published  therein,  at  least  three  successive 
weeks,  and  to  deposit  a  written  or  printed  copy  thereof  in 
the  post-office,  addressed  to  each  stockholder  at  his  usual 
place  of  residence,  at  least  three  weeks  previous  to  the  day 
fixed  upon  for  holding  such  meeting  ;  specifying  the  object 
of  the  meeting,  the  time  and  place  when  and  where  such 
meeting  shall  be  held,  and  the  amount  to  which  it  shall  be 
proposed  to  increase  or  diminish  the  capital,  and  the  business 
to  which  the  company  would  be  extended  or  changed,  and  a 
vote  of  at  least  two-thirds  of  all  the  shares  of  stock  shall  be 
necessary  to  an  increase  or  diminution  of  the  amount  of  its 
capital  stock,  or  the  extension  or  change  of  its  business  as 


APPENDIX   A.  329 

aforesaid,  or  to  enable  a  company  to  avail  itself  of  the  pro- 
visions of  this  act. 

Meetings,  how  to  be  Organized  and  Conducted. —  §  22.     If   at  any 

time  and  place  specified  in  the  notice  provided  for  in  the 
preceding  section  of  this  act,  stockholders  shall  appear  in 
person  or  by  proxy,  in  number  representing  not  less  than  two- 
thirds  of  all  the  shares  of  stock  of  the  corporation,  the)-  shall 
organize  by  choosing  one  of  the  trustees  chairman  of  the 
meeting,  and  also  a  suitable  person  for  secretary,  and  pro- 
ceed to  a  vote  of  those  present,  in  person  'or  by  proxy,  and 
if  on  canvassing  the  votes  it  shall  appear  that  a  sufficient 
number  of  votes  has  been  given  in  favor  of  increasing  or 
diminishing  the  amount  of  capital,  or  of  extending  or 
changing  its  business  as  aforesaid,  or  for  availing  itself  of  the 
privileges  and  provisions  of  this  act,  a  certificate  of  the  pro- 
ceedings, showing  a  compliance  with  the  provisions  of  this 
act,  the  amount  of  capital  actually  paid  in,  the  business  to 
which  it  is  extended  or  changed,  the  whole  amount  of  debts 
and  liabilities  of  the  company,  and  the  amount  to  which  the 
capital  stock  shall  be  increased  or  diminished,  shall  be  made 
out,  signed  and  verified  by  the  affidavit  of  the  chairman,  and 
be  countersigned  by  the  secretary,  and  such  certificate  shall 
be  acknowledged  by  the  chairman,  and  filed  as  required  by 
the  first  section  of  this  act,  and  when  so  filed,  the  capital 
stock  of  such  corporation  shall  be  increased  or  diminished,  to 
the  amount  specified  in  such  certificate,  and  the  business 
extended  or  changed  as  aforesaid,  and  the  company  shall  be 
entitled  to  the  privileges  and  provisions,  and  be  subject  to 
the  liabilities  of  this  act,  as  the  case  may  be. 

Indebtedness  of  Companies. — §  23.  If  the  indebtedness  of 
any  such  company  shall  at  any  time  exceed  the  amount  of 
its  capital  stock,  the  trustees  of  such  company  assenting 
thereto  shall  be  personally  and  individually  liable  tor  such 
excess  to  the  creditors  of  such  company. 

Saving  Clause. — §  24.  No  stockholder  shall  be  personally 
liable  for  the  payment  ot  any  debt  contracted  by  any  com- 
pany formed  under  this  act,  which  is  not  to  be  paid  within 
one  year  from  the  time  the  debt  is  contracted,  nor  unless  a 
suit  for  the  collection  of  such  debt  shall  be  brought  against 


33°  THE    LAW    OF   CORPORATIONS. 

such  company  within  one  year  after  the  debt  shall  become 
due  ;  and  no  suit  shall  be  brought  against  any  stockholder 
who  shall  cease  to  be  a  stockholder  in  any  such  company, 
for  any  debt  so  contracted,  unless  the  same  shall  be  com- 
menced within  two  years  from  the  time  he  shall  have  ceased 
to  be  a  stockholder  in  such  company,  nor  until  an  execution 
against  the  company  shall  have  been  returned  unsatisfied  in 
whole  or  in  part. 

Book  containing  the  Names  of  Stockholders  to  be  kept,  with  Amount 
of  Stock. — §  25.  It  shall  be  the  duty  of  the  trustees  of  every 
such  corporation  or  company  to  cause  a  book  to  be  kept  by 
the  treasurer  or  clerk  thereof,  containing  the  names  of  all  per- 
sons, alphabetically  arranged,  who  are  or  shall,  within  six 
years,  have  been  stockholders  of  such  company,  and  showing 
their  places  of  residence,  the  number  of  shares  of  stock  held 
by  them  respectively,  and  the  time  when  they  respectively 
became  the  owners  of  such  shares  ;  and  the  amount  of  stock 
actually  paid  in  ;  which  book  shall,  during  the  usual  business 
hours  of  the  day,  on  every  day  except  Sunday  and  the  fourth 
day  of  July,  be  open  for  the  inspection  of  stockholders  and 
creditors  of  the  company  and  their  personal  representatives, 
at  the  office  or  principal  place  of  business  of  such  company, 
in  the  county  where  its  business  operations  shall  be  located  ; 
and  any  and  every  such  stockholder,  creditor  or  representa- 
tive shall  have  a  right  to  make  extracts  from  such  book; 
and  no  transfer  of  stock  shall  be  valid  for  any  purpose  what- 
ever, except  to  render  the  person  to  whom  it  shall  be  trans- 
ferred liable  for  the  debts  of  the  company,  according  to  the 
provisions  of  this  act,  until  it  shall  have  been  entered  therein 
as  required  by  this  section,  by  an  entry  showing  to  and  from 
whom  transferred.  Such  book  shall  be  presumptive  evi- 
dence of  the  facts  therein  stated,  in  favor  of  the  plaintiff,  in 
any  suit  or  proceeding  against  such  company,  or  against  any 
one  or  more  stockholders.  Every  officer  or  agent  of  any 
such  company,  who  shall  neglect  to  make  any  proper  entry 
in  such  book,  or  shall  refuse  or  neglect  to  exhibit  the  same, 
or  allow  the  same  to  be  inspected,  and  extracts  to  be  taken 
therefrom,  as  provided  by  this  section,  shall  be  deemed 
guilty  of  a  misdemeanor,  and  the  company  shall  forfeit  and 


APPENDIX   A.  33  l 

pay  to  the  party  injured  a  penalty  of  fifty  dollars  for  every 
such  neglect  or  refusal,  and  all  the  damages  resulting  there- 
from :  And  every  company  that  shall  neglect  to  keep  such 
book  open  for  inspection  as  aforesaid  shall  forfeit  to  the 
people  the  sum  of  fifty  dollars  for  every  day  it  shall  so  neg- 
lect, to  be  sued  for  and  recovered  in  the  name  of  the  people, 
by  the  district  attorney  of  the  county  in  which  the  business 
of  such  corporation  shall  be  located  ;  and  when  so  recovered, 
the  amount  shall  be  paid  into  the  treasury  of  such  county 
for  the  use  thereof. 

General  Powers. — §  26.  Every  corporation  created  under 
this  act  shall  possess  the  general  powers  and  privileges  and 
be  subject  to  the  liabilities  and  restrictions  contained  in  title 
third,  chapter  eighteen,  of  the  first  part  of  the  Revised  Stat- 
utes, and  the  provisions  of  section  six,  article  first,  title  two, 
chapter  thirteen  of  the  first  part  of  the  Revised  Statutes, 
shall  apply  to  every  such  corporation.  {Thus  amended  by 
Laws  of  1 86 1 ,  eJiap.  1 70.] 

When  Treasurer  to  render  Statement  of  Assets,  etc. ;  Forfeiture. 
— §  27.  Whenever  any  person  or  persons  owning  five  per 
cent  of  the  capital  stock  of  any  company,  not  exceeding  one 
hundred  thousand  dollars,  or  any  person  or  persons  owning 
three  per  cent  of  the  capital  stock  of  any  company  exceed- 
ing one  hundred  thousand  dollars,  formed  under  the  provi- 
sions of  this  act,  shall  present  a  written  request  to  the  treas- 
urer thereof  that  they  desire  a  statement  of  the  affairs  of 
such  company,  it  shall  be  the  duty  of  such  treasurer  to  make 
a  statement  of  the  affairs  of  said  company,  under  oath,  em- 
bracing a  particular  account  of  all  its  assets  and  liabilities 
in  minute  detail,  and  to  deliver  such  statement  to  the  person 
who  presented  the  said  written  request  to  said  treasurer, 
within  twenty  days  after  such  presentation,  and  shall  also  at 
the  same  time  and  place  keep  on  file  in  his  office,  for  six 
months  thereafter,  a  copy  of  such  statement,  which  shall  at 
all  times  during  business  hours  be  exhibited  to  any  stock- 
holder of  said  company  demanding  an  examination  thereof  ; 
such  treasurer,  however,  shall  not  be  required  to  deliver  such 
statement  in  the  manner  aforesaid,  oftener  than  once  in  any 
six  months.     If  such   treasurer  shall    neglect  or  refuse   to 


332  THE    LAW    OF   CORPORATIONS. 

comply  with  any  of  the  provisions  of  this  act,  he  shall  forfeit 
and  pay  to  the  person  presenting  said  written  request  the 
sum  of  fifty  dollars,  and  the  further  sum  of  ten  dollars  for 
•every  twenty-four  hours  thereafter  until  such  statement 
shall  be  furnished,  to  be  sued  for  and  recovered  in  any  court 
having  cognizance  thereof.  {Added  by  Laws  of 1854,  chap. 
201,  and  thus  amended  by  Laics  of  1862,  chap.  472,  §  1.] 


APPENDIX  B. 

Laws  of  1875,  Chap.  611 — An  Act  to  Provide  for  the 
organization  and  regulation  of  certain  busi- 
NESS Corporations. 

For  what  Purposes. — §  i.  Corporations  may  be  organized 
under  the  provisions  of  this  act  for  the  carrying  on  of  any 
lawful  business  except  banking,  insurance,  the  construction 
and  operation  of  railroads  or  aiding  in  the  construction 
thereof,  and  the  business  of  savings-banks,  trust  companies 
or  corporations  intended  to  derive  profit  from  the  loan  or 
use  of  money,  or  safe-deposit  companies,  including  the  rent- 
ing of  safes  in  burglar  and  fire  proof  vaults. 

General  Powers. — §  2.  When  so  organized,  every  such  cor- 
poration shall  possess  the  following  general  powers : 

1.  To  have  succession  by  its  corporate  name  for  the 
period  limited  in  its  certificate  of  incorporation. 

2.  To  sue  and  be  sued  ;  to  complain  and  defend  in  any 
court. 

3.  To  make  and  use  a  common  seal  and  alter  the  same 
at  pleasure. 

4.  To  appoint  such  subordinate  officers  and  agents  as 
the  business  of  the  corporation  shall  require,  and  its  by-laws 
shall  provide  for. 

5.  To  make  by-laws  for  the  management  of  its  property, 
the  regulation  of  its  affairs,  for  the  transfer  of  its  stock,  and 
defining  the  duties  of  its  officers,  and  from  time  to  time  to 
amend  the  same. 

6.  To  purchase,  hold  and  possess  so  much  real  and  per- 
sonal estate  as  shall  be  necessary  for  the  transaction  of  its 
business,  and  sell  and  convey  the  same  when  not  required 
for  the  uses  of  the  corporation  ;  provided,  however,  that  all 
real  estate  acquired  in  satisfaction  of  any  liability  or  in- 
debtedness, unless  the  same  be  necessary  and  suitable  for 


334  THE   LAW   OF   CORPORATIONS. 

the  uses  and  business  of  the  corporation,  shall  be  sold  with- 
in three  years  after  becoming  the  property  of  such  corpora- 
tion, but  such  time  maybe  extended  to  a  period  not  exceed- 
ing five  years  in  all,  by  an  order  of  the  Supreme  Court  made 
in  the  district  in  which  the  principal  business  office  of  such 
corporation  is  located,  on  the  verified  petition  of  such  cor- 
poration, stating  the  reasons  for  such  extension. 

Certificate  of  incorporation §  3.  Whenever  three  or  more 

persons,  a  majority  of  whom  shall  be  citizens  and  residents 
of  this  state,  shall  propose  to  form  a  corporation  under  the 
provisions  of  this  act,  they  shall  make  a  certificate  to  that 
effect,  which  certificate  shall  be  signed  by  each  of  such  per- 
sons and  duly  acknowledged  by  them  before  some  officer 
authorized  to  take  acknowledgments  under  the  laws  of  this 
state.     Such  certificate  shall  set  forth : 

1.  The  name  of  the  proposed  corporation. 

2.  The  object  for  which  it  is  to  be  formed,  including  the 
nature  and  locality  of  its  business. 

3.  The  amount  and  description  of  the  capital  stock. 

4.  The  number  of  shares  of  which  such  capital  stock 
shall  consist. 

5.  The  location  of  the  principal  business  office. 

6.  The  duration,  of  the  corporation,  which,  however, 
shall  not  exceed  fifty  years.  {Thus  amended  by  Laws  of 
1890,  chap.  23,  §  1.] 

Secretary  of  State  to  Issue  License. — §  4.  Such  certificate  shall 
be  filed  in  the  office  of  the  secretary  of  state  ;  and  the  secre- 
tary of  state  shall  thereupon  issue  a  license  to  the  persons 
making  such  certificate,  empowering  them  as  commissioners 
to  open  books  for  subscriptions  to  the  capital  stock  of  such 
corporation  at  such  times  and  places  as  they  may  determine  ; 
but  no  license  shall  be  issued  in  the  case  of  a  proposed  cor- 
poration having  the  same  name  as  an  existing  corporation 
in  this  state,  or  a  name  so  nearly  resembling  that  of  an  exist- 
ing corporation  as  to  be  calculated  to  deceive. 

Subscriptions  to  Capital  Stock;  Meeting  of  Subscribers. — §  5.  Said 
commissioners  shall  proceed  to  open  books  for  subscriptions 
to  the  capital  stock  of  such  corporation,  and  no  such  sub- 
scription shall  be  received,  unless  at  the   time  of  making  it 


APPENDIX    B.  335 

the  person  so  subscribing  shall  pay  to  said  commissioners  ten 
per  cent  of  the  par  value  of  the  stock  subscribed  for  in  cash. 
When  one-half  of  the  capital  stock  has  been  subscribed,  said 
commissioncis  shall  call  a  meeting  of  the  subscribers  for  the 
purpose  of  adopting  by-laws  for  such  corporation  and  elect- 
ing directors  thereof.  Notice  of  such  meeting  shall  be  given 
to  every  subscriber,  by  depositing  in  the  post-office,  properly 
addressed  to  his  last  known  place  of  residence,  and  postage 
prepaid,  at  least  five  days  before  the  time  fixed,  a  written  or 
printed  notice,  stating  the  time,  place  and  object  of  such 
meeting. 

By-laws. — §  6.  The  by-laws  of  every  corporation  created 
under  the  provisions  of  this  act  shall  be  deemed  and  taken 
to  be  its  law,  and  shall  provide  : 

1.  The  number  of  directors  of  the  corporation. 

2.  The  term  of  office  of  such  directors,  which  shall  not 
exceed  one  year. 

3.  The  manner  of  filling  vacancies  among  directors  and 
officers. 

4.  The  time  and  place  of  the  annual  meeting. 

5.  The  manner  of  calling  and  holding  special  meetings 
of  the  stockholders. 

6.  The  number  of  stockholders  who  shall  attend,  either 
in  person  or  by  proxy,  at  every  meeting,  in  order  to  con- 
stitute a  quorum. 

7.  The  officers  of  the  corporation,  the  manner  of  their 
election  by  and  among  the  directors,  and  their  powers  and 
duties.  But  such  officers  shall  always  include  a  president, 
a  secretary,  and  a  treasurer. 

8.  The  manner  of  electing  or  appointing  inspectors  of 
election. 

9.  The  manner  of  amending  the  by-laws. 

Record  of  Subscribers'  Meeting  to  be  Filed ;  Certificate  of  Incorpora- 
tion ;  Fees  of  Secretary  of  State  ;  of  County  Clerk  ;  Amendment  of  By- 
laws.— §  j.  Within  ten  days  after  the  said  subscribers'  meet- 
ing, said  commissioners  shall  file,  in  the  office  of  the  secretary 
of  state,  a  verified  record  of  the  proceedings  thereof,  con- 
taining a  copy  of  the  subscription  list,  a  copy  of  the  by-laws 
adopted,  and  the    names  of  the  directors    chosen.     There- 


336  THE   LAW    OF   CORPORATIONS. 

upon  the  secretary  of  state  shall  issue  to  said  directors  a 
certificate,  setting  forth  that  said  corporation  is  fully  organ- 
ized in  accordance  with  this  act.  Such  certificate  shall 
include  a  copy  of  the  original  certificate  provided  for  in 
section  three  of  this  act,  the  date  and  place  of  the  sub- 
scribers' meeting,  the  names  of  the  directors  elected,  and  a 
statement  that  all  the  provisions  of  this  act  have  been  duly 
observed  in  the  organization  of  such  corporation.  A  copy 
of  such  certificate  shall,  within  ten  days  after  the  issuing 
thereof  by  the  secretary  of  state,  be  filed  in  the  office  of  the 
clerk  of  the  county  in  which  the  principal  business  office  of 
such  corporation  is  situated.  Such  certificate  shall  be  re- 
corded at  length  in  a  book  to  be  kept  in  the  office  of  the 
secretary  of  state,  to  be  known  as  the  record  of  incorpora- 
tions, and  also  in  a  similar  book  in  the  office  of  the  county 
clerk  aforesaid.  Such  certificate,  or  a  copy  thereof  duly 
certified  by  the  secretary  of  state  or  his  deputy,  shall  be 
presumptive  evidence  of  the  incorporation  of  the  corpora- 
tion named  therein,  in  all  courts  and  proceedings  in  this 
state.  The  secretary  of  state  shall  receive  for  the  filing  and 
issuing  of  all  the  necessary  documents  in  and  about  the 
organization  of  a  corporation  under  this  act,  the  sum  of  ten 
dollars;  and  for  each  certified  copy  of  certificate  of  in- 
corporation, the  sum  of  three  dollars,  which  sum  shall  be 
paid  into  the  treasury  of  the  state  ;  and  county  clerks  shall 
receive  the  fees  now  allowed  by  law.  Upon  every  amend- 
ment of  the  by-laws  of  any  such  corporation,  a  copy  of  the 
amended  by-law  shall  be  filed  in  the  office  of  the  secretary 
of  state  and  of  such  county  clerk,  and  shall  not  take  effect, 
until  so  filed  ;  and  a  copy  thereof,  certified  by  the  secretary 
of  state  or  his  deputy,  shall  be  received  as  presumptive  evi- 
dence of  such  amended  by-law  in  all  courts  and  proceedings. 

Failure  to  Organize. — jj  8.  Unless  such  corporation  shall  be 
fully  organized  as  provided  in  the  last  preceding  section, 
within  one  year  after  the  issuing  of  the  license  to  commis 
sioners  to  open  books,  such  license  shall  be  deemed  to  be 
revoked,  and  all  proceeding  thereunder  shall  be  void. 

Secretary  of  State  to  publish  Statement. — §    o,.    The    secretary 
of  state  shall  publish,  as  an   appendix  to  the  session  laws  of 


APPENDIX    B.  337 

each  year,  a  statement  of  all  the  corporations  organized 
under  this  act  during  the  preceding  year,  containing  in  each 
case  the  name  of  the  corporation,  its  principal  business,  the 
location  of  its  principal  business  office,  the  amount  of  cap- 
ital stock,  the  date  of  the  filing  of  the  preliminary  certificate 
and  of  the  granting  of  the  final  certificate  of  incorporation 
by  the  secretary  of  state  ;  and  any  change  of  location  or 
capital  of  any  such  corporation  made  during  the  preceding 
year. 

Business  to  be  Managed  by  Board  of  Directors ;  Number  of  Di- 
rectors;  Quorum;  Duty  of  Secretary  and  Treasurer. — §  io.  The  busi- 
ness of  every  corporation  created  hereunder  shall  be  man- 
aged by  a  board  of  directors  (the  members  of  which  at  their 
election  and  throughout  their  term  of  office  shall  be  stock- 
holders in  such  corporation  to  at  least  the  extent  of  five 
shares,  and  shall  hold  their  offices  until  their  successors  are 
chosen),  and  by  such  officers,  to  be  elected  by  and  from 
among  said  directors,  as  the  by-laws  shall  prescribe.  The 
number  of  directors  shall  not  be  less  than  three  nor  more 
than  thirteen,  and  the  existing  number  thereof  may  be 
changed  to  not  less  than  three  nor  more  than  thirteen,  by 
a  vote  of  a  majority  in  interest  of  the  owners  of  the  stock 
issued  by  said  corporation,  present  in  person,  or  by  attorney 
duly  authorized,  at  a  meeting  of  the  stockholders  of  such 
corporation  called  pursuant  to  such  a  notice,  specifying  the 
purpose  of  such  meeting  and  given  to  each  stockholder,  as 
is  prescribed  in  section  five  of  this  act ;  and  a  statement  of 
the  change  of  the  number  of  directors  so  made,  signed  and 
verified  by  the  president  or  a  vice-president  of  the  corpora- 
tion and  by  the  secretary  of  the  meeting  at  which  the 
change  was  made,  shall  be  filed  in  the  office  of  the  secretary 
of  state,  and  a  copy  thereof  in  the  office  of  the  clerk  of  the 
county  in  which  the  principal  business  office  of  the  company 
is  situated,  within  ten  days  after  such  meeting.  A  majority 
of  the  whole  number  of  directors  shall  be  necessary  to 
constitute  a  quorum.  The  secretary  shall  record  all  the 
votes  of  the  corporation  and  the  minutes  of  its  transactions 
in  a  book  to  be  kept  for  that  purpose.  The  treasurer  shall 
give  bonds  in  such  sums  and  with  such  sureties  as  are  re- 


338  THE   LAW   OF   CORPORATIONS. 

quired  by  the  by-laws  for  the  faithful  discharge  of  his 
duties.     [Thus  amended  by  Laws  of  1890,  chap.  23,  §  2.] 

Capital  Stock :  Subscriptions  when  Payable  ;  Penalties  for  Failure 
to  pay  Instalments. — §  11.  The  capital  stock  of  every  corpora- 
tion formed  under  this  act  shall  be  divided  into  shares  of 
not  less  than  ten  dollars,  nor  more  than  one  hundred  dollars 
each  ;  and  shall  in  no  case  exceed  five  million  dollars.  All 
subscriptions  therefor  shall  be  made  payable  to  the  corpora- 
tion in  such  instalments  and  at  such  time  or  times  as  shall 
be  fixed  by  the  by-laws  or  by  the  directors  acting  under  the 
by-laws  ;  and  if  default  be  made  in  any  payment,  an  action 
may  be  maintained  in  the  name  of  the  corporation  to 
recover  any  instalment  which  shall  remain  due  and  unpaid 
for  the  period  of  thirty  days  after  the  time  so  fixed  for  the 
payment  thereof;  and  no  stockholder  shall  be  entitled  to 
vote  at  any  election  or  at  any  meeting  of  the  stockholders 
on  whose  share  or  shares  any  instalments  or  arrearages  may 
have  been  due  and  unpaid  for  the  period  of  thirty  days 
immediately  preceding  such  election  or  meeting.  The  cor- 
poration may,  by  by-laws,  prescribe  other  penalties  for  a 
failure  to  pay  the  instalments  that  from  time  to  time 
become  due,  not  exceeding  forfeiture  of  the  stock,  and  the 
amount  paid  thereon,  but  no  such  forfeiture  shall  be  de- 
clared against  any  stockholder  before  demand  shall  have 
been  made  for  the  amount  due  thereon,  either  in  person  or 
by  a  written  or  printed  notice  duly  mailed  to  such  stock- 
holder at  his  last  known  place  of  residence  at  least  thirty 
days  prior  to  the  time  when  such  forfeiture  is  to  take  effect ; 
and  provided,  further,  that  upon  such  forfeiture  the  shares 
of  stock  held  by  such  delinquent  stockholder  or  subscriber 
shall  be  sold  at  public  auction,  at  the  office  of  said  corpora- 
tion, after  ten  days'  notice  thereof  shall  be  conspicuously 
posted  up  in  said  office,  and  the  proceeds  of  such  sale,  over 
and  above  the  amount  due  on  said  shares,  and  after  deduct- 
ing the  expenses  of  such  sale,  if  any,  shall  be  paid  to  the 
delinquent  stockholder  or  subscriber.  \TJius  amended  by 
Laws  of  1883,  chap.  102.J 

Certificate  of  stock. — §  12.  The  directors  of  such  corpora- 
tion  shall   prepare  certificates   of  stock,   and    shall    deliver 


APPENDIX   B.  339 

them,  signed  by  the  president  and  treasurer  and  sealed  with 
the  seal  of  the  corporation,  to  each  person  entitled  to  receive 
the  same,  according  to  the  number  of  shares  held,  which 
certificates  of  stock  shall  be  transferable  at  the  pleasure  of 
the  holder,  in  person  or  by  attorney  duly  authorized,  subject, 
however,  to  all  payments  due  or  to  become  due  thereon  ; 
and  the  assignee  to  whom  the  same  has  been  so  transferred 
shall  be  a  member  of  said  corporation,  and  have  and  enjoy 
all  the  immunities,  privileges  and  franchises,  and  be  subject 
to  all  the  liabilities,  conditions  and  penalties  incident  there- 
to, in  the  same  manner  as  the  original  holder  would  have 
been  ;  but  no  certificate  shall  be  transferred  so  long  as  the 
holder  thereof  is  indebted  to  such  corporation  unless  the 
board  of  directors  shall  consent  thereto. 

May  borrow  Money. — §  1 3.  It  shall  be  lawful  for  all  such 
corporations  to  borrow  money  for  the  legitimate  purposes 
of  such  corporation,  and  for  such  purpose  to  issue  bonds 
with  or  without  coupons  attached  thereto,  or  to  mortgage 
any  real  estate  which  it  may  have  or  possess,  and  bearing 
interest  not  exceeding  six  per  centum  per  annum  ;  but  the 
amount  of  such  bonds  and  such  mortgages  outstanding  at 
any  one  time  shall  not  exceed  one-half  of  the  value  of  the 
corporate  property  of  such  corporation.  Any  issue  of  such 
bonds  and  such  mortgages  beyond  the  amount  herein  speci- 
fied shall  render  every  director  voting  the  same  personally 
liable  to  any  holder  of  such  bonds  or  such  mortgages,  for 
any  damage  caused  by  such  over-issue  to  such  holder.  No 
such  mortgage  or  mortgages  shall  be  issued  however,  with- 
out first  having  obtained  the  written  assent  of  its  stock- 
holders owning  more  than  two-thirds  of  the  stock  of  said 
corporation.     [Tlins  amended  by  Laws  of  i838,  chap.  394.] 

Issue  of  Stock. — §  14.  No  corporation  organized  under  this 
act  shall  issue  either  stock  or  bonds  except  for  money,  labor 
done,  or  property  actually  received  for  the  use  and  legiti- 
mate purposes  of  such  corporation  at  its  fair  value,  and  all 
fictitious  increase  of  stock  or  indebtedness  in  any  form  shall 
be  void. 

Increase    or    Decrease  of  Capital    Stock §      15.    The     capital 

stock  of  any  corporation  organized  under   this  act  may  be 


34°  THE   LAW   OF   CORPORATIONS. 

increased  to  an  amount  not  to  exceed  in  the  aggregate  two 
million  dollars,  or  reduced  by  a  vote  of  a  majority  of  the 
stockholders  in  number,  and  representing  a  majority  of  the 
stock  of  such  corporation,  at  any  meeting  thereof  convened 
for  that  purpose,  pursuant  to  notice  thereof  specifying  the 
object  of  such  meeting,  and  served  pursuant  to  the  pro- 
visions of  section  five.  A  statement  of  such  increase  or 
reduction  shall  be  filed  in  the  office  of  the  secretary  of  state, 
and  of  the  clerk  of  the  county  in  which  the  principal  busi- 
ness office  of  such  corporation  is  situated,  within  ten  days 
after  such  action.  But  before  any  corporation  shall  be 
entitled  to  diminish  the  amount  of  its  capital  stock,  if  the 
amount  of  its  debts  and  liabilities  shall  exceed  the  amount 
of  capital  to  which  it  is  proposed  to  be  reduced,  such  amount 
of  debts  and  liabilities  shall  be  first  satisfied  and  reduced  so 
as  not  to  exceed  such  diminished  amount  of  capital. 

Books  of  Account — §  16.  It  shall  be  the  duty  of  the  di- 
rectors of  every  such  corporation  to  cause  to  be  kept  at  its 
principal  office  or  place  of  business,  correct  books  of  account 
of  all  its  business  and  transactions,  and  every  stockholder  in 
such  corporation  shall  have  the  right  at  all  reasonable  times 
by  himself  or  his  attorney  to  examine  the  records  and  books 
of  account  of  such  corporation. 

Book  of  Stockholders. — §  17.  It  shall  be  the  duty  of  the 
directors  of  every  such  corporation  to  cause  a  book  to  be 
kept  by  the  treasurer  or  clerk  thereof,  containing  the  names 
of  all  persons,  alphabetically  arranged,  who  are  or  shall 
within  six  years  have  been  stockholders  of  such  corporation, 
and  showing  their  places  of  residence,  the  number  of  shares 
of  stock  held  by  them,  respectively,  and  the  time  when  they, 
respectively,  became  the  owners  of  such  shares,  and  the 
amount  actually  paid  thereon  ;  which  book  shall,  during  the 
usual  business  hours  of  the  day,  on  every  day,  except  Sun- 
days and  legal  holidays,  be  open  for  the  inspection  of  stock- 
holders and  creditors  of  the  corporation,  and  their  personal 
representatives,  at  the  principal  business  office  of  such  cor- 
poration ;  and  any  and  every  such  stockholder,  creditor  or 
representative  shall  have  a  right  to  make  extracts  from  such 
book  ;  and  no  transfer  of  stock  shall  be  valid  for  any  purpose 


APPENDIX   B.  341 

whatever,  except  to  render  the  person  to  whom  it  shall  be 
transferred  liable  for  the  debts  of  the  corporation  according 
to  the  provisions  of  this  act,  until  it  shall  have  been  entered 
therein  as  required  by  this  section,  by  an  entry  showing 
from  and  to  whom  transferred.  Such  book  shall  be  pre- 
sumptive evidence  of  the  facts  therein  stated,  in  favor  of 
the  plaintiff  in  any  suit  or  proceeding  against  such  corpora- 
tion, or  against  any  one  or  more  stockholders.  Every'  officer 
or  agent  of  any  such  corporation,  who  shall  neglect  to  make 
any  proper  entry  in  such  book,  or  shall  refuse  or  neglect  to 
exhibit  the  same,  or  allow  the  same  to  be  inspected,  and 
extracts  to  be  taken  therefrom,  as  provided  by  this  section, 
shall  be  deemed  guilty  of  a  misdemeanor  ;  and  the  corpora- 
tion shall  forfeit  and  pay  to  the  party  injured  a  penalty  of 
fifty  dollars  for  every  such  neglect  or  refusal  and  all  the 
damages  resulting  therefrom.  And  every  corporation  that 
shall  neglect  to  keep  such  book  open  for  inspection  as  afore- 
said, shall  forfeit  to  the  people  the  sum  of  fifty  dollars  for 
every  day  it  shall  so  neglect,  to  be  sued  for  and  recovered 
in  the  name  of  the  people  of  the  state  by  the  district 
attorney  of  the  county  in  which  the  principal  business  office 
of  such  corporation  is  located,  and  the  amount  so  recovered 
shall  be  paid  to  the  proper  authorities  for  the  support  of 
the  poor  of  such  county. 

Annual  Reports. — §  1 8.  Every  such  corporation  shall  an- 
nually, within  twenty  days  after  the  first  day  of  January,  or 
in  case  of  such  corporation  doing  business  without  the 
United  States,  then  within  twenty  days  after  the  first  day 
of  April,  make  a  report  as  of  the  said  first  day  of  January, 
which  shall  state  the  amount  of  capital,  and  the  proportion 
actually  paid  in,  the  amount  and,  in  general  terms,  the 
nature  of  its  existing  assets  and  debts,  and  the  names  of  its 
then  stockholders,  and  the  dividends,  if  any,  declared  since 
the  last  report,  which  report  shall  be  signed  by  the  president 
and  a  majority  of  the  directors,  and  shall  be  verified  by  oath 
of  the  president  or  secretary  of  such  corporation,  and  filed 
in  the  office  of  the  secretary  of  state ;  and  if  any  such  cor- 
poration shall  fail  so  to  do,  all  the  directors  thereof  shall  be 
jointly  and  severally  liable   for  all  the  debts  of  the  corpora- 


342  THE   LAW   OF   CORPORATIONS. 

tion  then  existing,  and  for  all  that  shall  be  contracted  before 
such  report  shall  be  made.  Provided,  however,  that  any 
such  corporation  doing  business  without  the  United  States 
shall  still  be  required  to  make  such  report,  within  twenty 
days  after  the  first  day  of  January,  in  each  year  as  aforesaid, 
unless  such  corporation  shall  make  and  file  in  the  office  of 
the  secretary  of  state,  within  twenty  days  after  the  first  day 
of  January  in  each  year,  a  certificate  verified  by  the  oath  of 
the  president,  secretary  or  treasurer  of  such  corporation, 
stating  that  said  corporation  is  at  the  date  of  such  certificate 
doing  business  without  the  United  States,  and  such  certifi- 
cate shall  be  conclusive  evidence  for  the  purposes  of  this 
section,  that  such  corporation  is  actually  doing  business 
without  the  United  States,  and  provided  that  if  any  director 
shall  file  with  the  secretary  of  state,  at  any  time  within 
thirty  days  after  such  first  day  of  January,  or  first  day  of 
April,  as  the  case  may  be,  a  certificate,  verified  by  the  oath 
of  such  director,  stating  that  he  has  endeavored  to  have 
such  report  made  and  signed  as  aforesaid,  but  that  the 
officers  or  a  majority  of  the  directors  have  refused  or  neg- 
lected to  make  and  file  such  report ;  and  shall  append  to 
such  certificate  a  report  containing  the  items  aforesaid,  so 
far  as  they  are  within  his  knowledge  or  are  obtainable  from 
sources  of  information  open  to  him,  which  report  shall  be 
verified  by  him  as  being  true  to  the  best  of  his  knowledge, 
information  and  belief,  in  that  case  such  director  shall  not 
be  liable  on  account  of  such  failure  to  make  and  file  such 
report  upon  making  proof  of  such  facts  in  any  action  which 
may  be  commenced  against  him  upon  the  trial  thereof. 
Whenever,  under  this  section,  a  judgment  shall  be  recovered 
against  a  director  severally,  all  the  directors  of  the  corpora- 
tion shall  contribute  a  ratable  share  of  the  amount  paid  by 
such  director  on  such  judgment,  and  such  director  shall 
have  a  right  of  action  against  his  co-directors,  jointly  or 
severally,  to  recover  from  them  the  proportion  of  the 
amount  so  paid  on  such  judgment.  [T/i/ts  amended  by  Laics 
of  1 884,  chap.  208.] 

Dividends. — §  19.   1(   the   directors  of  any   such   corpora- 
tion  shall  declare  and   pay  any  dividend  when  the  corpora- 


APPENDIX    B.  343 

tion  is  insolvent,  or  any  dividend  the  payment  of  which 
would  render  it  insolvent,  or  which  would  diminish  the 
amount  of  its  capital  stock,  the  directors  voting  in  favor 
of  declaring  such  dividend  shall  be  jointly  and  severally 
liable  for  all  the  debts  of  the  corporation  then  existing, 
and  for  all  that  shall  be  thereafter  contracted  while  they 
shall  respectively  continue  in  office. 

Loans  to  Stockholder. — §  20.  No  loan  of  money  shall  be 
made  by  any  such  corporation  to  any  stockholder  therein, 
and  if  any  such  loan  shall  be  made  to  a  stockholder,  the 
officers  who  shall  make  it,  or  who  shall  assent  thereto,  shall 
be  jointly  and  severally  liable  to  the  extent  of  such  loan  and 
interest  for  all  the  debts  of  the  corporation  contracted  be- 
fore the  repayment  of  the  sum  so  loaned. 

False  Certificates.— §  21.  If  any  certificate  or  report  made, 
or  public  notice  given,  by  the  officers  of  any  such  corpora- 
tion shall  be  false  in  any  material  representation,  all  the 
officers  who  shall  have  signed  the  same  shall  be  jointly  and 
severally  liable  for  all  the  debts  of  the  corporation  contracted 
while  they  are  officers  thereof. 

Liability  of  Directors. — §22.  If  the  indebtedness  of  any 
such  corporation  shall  at  any  time  exceed  the  amount  of 
its  capital  stock,  the  directors  of  such  corporation  creating 
such  indebtedness  shall  be  personally  and  individually 
liable  for  such  excess  to  the  creditors  of  such  corporation. 

Trustees  of  Stock. — §  23.  No  person  holding  stock  in  any 
such  corporation,  as  executor,  administrator,  guardian  or 
trustee,  and  no  person  holding  such  stock  as  collateral  secu- 
rity, shall  be  personally  subject  to  any  liability  as  stock- 
holder of  such  corporation  ;  but  the  person  pledging  such 
stock  shall  be  considered  as  holding  the  same,  and  shall  be 
liable  as  a  stockholder  accordingly ;  and  the  estates  and 
funds  in  the  hands  of  such  executor,  administrator,  guardian 
or  trustee  shall  be  liable  in  like  manner,  and  to  the  same 
extent,  as  the  testator  or  intestate,  or  the  ward  or  person 
interested  in  such  trust  fund  would  have  been,  if  he  had 
been  living  and  competent  to  act,  and  held  the  same  stock 
in  his  own  name. 

Vote  of  Executors,  etc. — §  24.   Every  such  executor,  admin- 


344  THE   LAW    OF   CORPORATIONS. 

istrator,  guardian  or  trustee  shall  represent  the  share  or 
shares  of  stock  in  his  hands  at  all  meetings  of  the  corpora- 
tion, and  may  vote  accordingly  as  a  stockholder,  and  every 
person  who  shall  pledge  his  stock  as  aforesaid  may  neverthe- 
less represent  the  same  at  all  such  meetings,  and  may  vote 
accordingly  as  a  stockholder. 

Limitation  on  Stockholder's  Liability. — §  25.  No  Stockholder 
shall  be  personally  liable  for  the  payment  of  any  debt  con- 
tracted by  any  corporation  formed  under  this  act,  which  is 
not  to  be  paid  within  two  years  from  the  time  the  debt  is 
contracted,  nor  unless  an  action  for  the  collection  of  such 
debt  shall  be  brought  against  such  corporation  within  two 
years  after  the  debt  shall  become  due  ;  and  no  action  shall 
be  brought  against  any  stockholder  who  shall  cease  to  be 
a  stockholder  in  any  such  corporation  for  any  debt  so  con- 
tracted, unless  the  same  shall  be  commenced  within  two 
years  from  the  time  he  shall  have  ceased  to  be  a  stockholder 
in  such  corporation. 

Annual  Election  of  Directors §  26.    The  annual  elections  of 

directors  shall  be  held  at  such  time  and  place  as  shall  be 
designated  by  the  by-laws  of  the  corporation,  and  public 
notice  of  such  time  and  place  shall  be  published,  not  less 
than  ten  days  previous  thereto,  in  a  newspaper  published  in 
a  city  or  town  in  which  the  principal  business  office  of  the 
corporation  is  situated,  if  a  newspaper  be  published  therein, 
and  otherwise  in  the  newspaper  published  nearest  to  said 
office ;  and  the  election  shall  be  made  by  such  of  the  stock- 
holders as  shall  attend  for  that  purpose,  either  in  person  or 
by  proxy.  No  person  shall  be  permitted  to  vote  upon  the 
proxy  of  a  stockholder  in  any  such  corporation  after  the 
lapse  of  eleven  months  from  the  date  thereof,  unless  the 
stockholder  shall  have  specified  therein  that  it  is  to  continue 
in  force  for  some  longer  and  limited  time.  All  elections 
shall  be  by  ballot,  and  each  stockholder  shall  be  entitled  to 
as  many  votes  as  shall  equal  the  number  of  his  shares  multi- 
plied by  the  number  of  directors  to  be  elected,  and  he  may 
distribute  his  votes  among  those  to  be  voted  for  as  he  sees 
fit ;  and  the  persons  receiving  the  greatest  number  of  votes 
shall  be  directors,  and  when  any  vacancy  shall  occur  among 


APPENDIX   B.  345 

the  directors  by  death,  resignation  or  otherwise,  it  shall  be 
filled  for  the  remainder  of  the  year  in  such  manner  as  may 
be  provided  for  by  the  by-laws  of  the  said  corporation. 

Failure  of  Election. — §  27.  In  case  it  shall  happen  at  any 
time  that  an  election  of  directors  shall  not  be  made  on  the 
day  designated  by  the  by-laws  of  said  corporation,  when 
it  ought  to  have  been  made,  the  corporation,  for  that 
reason,  shall  not  be  dissolved,  but  it  shall  be  lawful,  on  any 
other  day  within  three  months  thereafter,  to  hold  an  election 
for  directors,  upon  service  of  notice  upon  the  stockholders 
thereof  respectively  in  the  manner  provided  in  section  five 
of  this  act ;  and  all  acts  of  directors  shall  be  valid  and  bind- 
ing as  against  such  corporation  until  their  successors  shall 
be  elected. 

inspectors  of  Election. — §  28.  Every  person  acting  as  an  in- 
spector of  election  in  any  such  corporation  shall,  before 
entering  upon  the  duties  of  his  office,  take  and  subscribe  an 
oath  or  affirmation  before  some  officer  authorized  to  admin- 
ister the  same,  that  he  will  discharge  the  duties  of  his  office 
with  fidelity,  and  that  he  will  not  receive  any  vote  but  such 
as  he  believes  to  be  legal,  nor  reject  any  which  he  be- 
lieves to  be  legal ;  and  if  any  such  inspector  shall  violate 
this  oath  or  affirmation,  he  shall  be  subject  to  all  the 
penalties  imposed  by  law  upon  inspectors  of  general  state 
elections  in  this  state  violating  their  duty,  and  shall  be  pro- 
ceeded against  in  like  manner  and  with  like  effect. 

Duration  of  Corporate  Existence. — §  29.  Whenever  any  cor- 
poration organized  under  this  act  has  fixed  the  duration  of 
its  corporate  existence  for  a  less  period  than  fifty  years,  it 
may,  at  any  time,  extend  the  term  of  its  existence  beyond 
the  time  mentioned  in  the  original  certificate  of  incorpora- 
tion by  the  consent  of  the  stockholders  owning  two-thirds  in 
amount  of  the  capital  stock  of  such  corporation,  in  and  by 
a  certificate  to  be  signed  by  such  stockholders,  in  person  or 
by  attorney  duly  authorized  and  acknowledged  or  proved, 
so  as  to  enable  it  to  be  recorded,  which  certificate  shall  be 
filed  in  the  office  of  the  secretary  of  state,  and  of  the  clerk 
of  the  county  in  which  the  principal  business  office  of  such 
corporation  is  situated,  and  the  said  secretary  of  state,  and 


346  THE    LAW    OF    CORPORATIONS. 

the  county  clerk,  respectively,  upon  such  filing  shall  record 
the  same  in  the  record  of  corporations  kept  in  his  office,  and 
make  a  memorandum  of  such  record  in  the  margin  of  the 
original  certificate  in  such  record  book  ;  and  thereupon  the 
time  of  existence  of  such  corporation  shall  be  extended, 
as  designated  in  such  certificate,  for  a  term  which,  with  the 
term  originally  fixed,  will  not  exceed  fifty  years. 

Taxes. — §  30.  Every  corporation  organized  under  this 
act  shall  be  taxed  on  all  of  its  property,  except  its  real  estate, 
in  the  town,  city  or  village,  where  its  principal  business  of- 
fice is  situated,  and  on  its  real  estate  in  the  town,  city,  or 
village  where  such  real  estate  is  situated  shall  be  taxed 
therein. 

Change  of  Place  of  Business.  — §  31.  Such  corporation  may 
change  its  principal  place  of  business  by  the  consent  of  the 
stockholders  owning  two-thirds  in  amount  of  the  capital 
stock  of  such  corporation,  in  and  by  a  certificate  to  be  signed 
by  such  stockholders  in  person  or  by  attorney  duly  author- 
ized and  acknowledged  or  proved,  which  certificate  shall  be 
filed  in  the  office  of  the  secretary  of  state,  and  of  the  clerk 
of  the  county  in  which  the  principal  business  office  of  such 
corporation  is  situated  ;  and  the  secretary  of  state  and 
county  clerk  respectively,  shall  upon  such  filing,  record  the 
same  in  the  record  of  corporations  kept  in  his  office,  and 
make  a  memorandum  of  such  record  in  the  margin  of  the 
record  of  the  original  certificate  recorded  in  such  office,  and 
thereupon  the  principal  business  office  of  such  corporation 
shall  be  deemed  to  be  changed  as  stated  in  such  certificate. 

Under  what  Provisions  Existing  Corporations  may  Organize. — 
$  32.  Any  corporation  heretofore  or  hereafter  organized  un- 
der the  general  laws  of  this  state,  except  such  corporations 
as  are  particularly  excepted  by  the  first  section  of  this  act 
from  organizing  thereunder,  may  come  under  and  avail  itself 
of  the  privileges  and  provisions  of  this  act  by  complying  with 
the  following  provisions  :  The  directors  of  such  corporation 
shall  publish  a  notice,  signed  by  at  least  a  majority  of  them, 
in  a  newspaper  published  in  the  county  in  which  the  princi- 
pal business  office  thereof  is  situated,  for  at  least  three  suc- 
cessive   weeks,  and  to    deposit    a    written  or  printed  copy 


APPENDIX   B.  347 

thereof  in  the  post-office,  postage  prepaid,  addressed  to  each 
stockholder,  at  his  last  known  place  of  residence,  at  least 
three  weeks  previous  to  the  day  fixed  upon  for  holding  such 
meeting,  specifying  the  object  of  the  meeting,  and  the  time 
and  place  when  and  where  such  meeting  shall  be  held.  At 
the  time  and  place  specified  in  the  notice,  the  stockholders 
shall  organize  by  choosing  one  of  the  directors  chairman  of 
the  meeting,  and  also  a  suitable  person  for  secretary,  and 
proceed  to  a  vote  of  those  present,  in  person  or  by  proxy  ; 
and  if  votes  represent  a  majority  of  all  the  stock  of  the  com- 
pany shall  be  given  in  favor  of  availing  itself  of  the  provis- 
ions of  this  act,  the  said  officers  shall  make  a  certificate  of 
the  proceedings,  showing  a  compliance  therewith,  duly  ac- 
knowledged, and  stating : 

i.  The  name  of  the  corporation. 

2.  The  object  for  which  it  is  formed,  including  the  nature 
and  locality  of  its  business. 

3.  The  amount  and  description  of  the  capital  stock. 

4.  The   number   of   shares  of  which   such  capital  stock 
consists. 

5.  The  location  of  the  principal  business  office. 

6.  The  duration  of  the  corporation,  which,  however,  shall 
not  exceed  fifty  years. 

7.  The  names  of  the  directors  for  the  ensuing  year  ;  which 
certificate,  with  a  copy  of  the  by-laws  of  such  corporation, 
shall  be  filed  in  the  office  of  the  secretary  of  state,  whereupn 
the  secretary  of  state  shall  issue  to  said  directors  a  certificate 
setting  forth  that  said  corporation  is  fully  reorganized  in  ac- 
cordance with  this  act.  Such  certificate  of  the  secretary  of 
state  shall  include  a  copy  of  the  certificate  of  the  proceed- 
ings (not  including  the  by-laws),  held  as  hereinbefore  set 
forth,  the  date  and  place  of  the  stockholders'  meeting,  the 
names  of  the  directors  elected,  and  a  statement  that  all  the 
provisions  of  this  act  have  been  duly  observed  in  the  reorgan- 
ization of  such  corporation.  A  copy  of  such  certificate  shall, 
within  ten  days  from  the  issuing  thereof  by  the  secretary  of 
state,  be  filed  in  the  office  of  the  clerk  of  the  county  in 
which  the  principal  business  office  of  such  corporation  is  sit- 
uated.    Such  certificate  shall  be  recorded  at  length  in  a  book 


348  THE    LAW    OF   CORPORATIONS. 

to  be  kept  in  the  office  of  the  secretary  of  state.  For  the 
issuing  of  this  certificate  of  reorganization  the  secretary  of 
state  shall  receive  the  same  fee  as  is  provided  in  section  seven 
of  chapter  six  hundred  and  eleven  of  the  laws  of  eighteen 
hundred  and  seventy-five.  From  the  time  of  such  filing  such 
corporation  shall  be  deemed  to  be  a  corporation  organized 
under  this  act,  and,  if  originally  organized  or  incorporated 
under  any  general  law  of  this  state,  shall  have  and  exercise 
all  such  rights  and  franchises  as  it  has  theretofore  had  and 
exercised,  under  the  laws  pursuant  to  which  it  was  originally 
incorporated.  But  such  change  or  proceedings  shall  not  in 
any  way  affect,  change  or  diminish  the  existing  liabilities  of 
the  corporation  so  availing  itself  of  the  provisions  of  this  act. 
[T/i?is  amended  by  Lazes  of  1885,  chap.  540,  §  I.] 

Classifications  of  Corporations. — §  33.  The  corporations 
formed  under  this  act  shall  be  of  two  classes,  to  be  known 
respectively,  as : 

1.  Full  liability  companies.     . 

2.  Limited  liability  companies. 

Full  Liability  Companies. — Jj  34.  In  "  full  liability  compa- 
nies," all  the  stockholders  shall  be  severally  individually  liable 
to  the  creditors  of  the  company  in  which  they  are  stock- 
holders, for  all  debts  and  liabilities  of  such  company,  and 
may  be  joined  as  defendants  in  any  action  against  the  com- 
pany. No  execution  shall  issue  against  any  stockholder 
individually,  until  execution  has  been  issued  against  the 
company  and  been  returned  unsatisfied  ;  and  whenever  a 
judgment  shall  be  recovered  against  a  stockholder  individu- 
ally, all  the  stockholders  shall  contribute  a  proportionate 
share  of  the  amount  paid  by  such  stockholder  on  such 
judgment,  proportionate  to  the  number  of  shares  of  stock 
owned  by  each  of  such  stockholders,  and  such  stockholder 
shall  have  a  right  of  action  against  the  other  stockholders  in 
such  corporation  jointly  or  severally,  to  recover  from  them 
and  each  of  them,  the  proper  portion  due  by  them  and  each 
of  them  of  the  amount  so  paid  on  such  judgment. 

Limited  Liability  Companies. — §  35.  In  "limited  liability 
companies,"  the  name  of  the  company  shall  in  every  case 
have  as  its  last  word,  the  word  "  limited"  and   every  such 


APPENDIX    B.  -349 

corporation  shall  paint  or  affix,  and  shall  keep  painted 
or  affixed,  its  name  on  the  outside  of  every  office  or  place 
in  which  the  business  of  the  company  is  carried  on,  in  a  con- 
spicuous position  in  letters  easily  legible,  and  shall  have  its 
full  name  stated  in  legible  characters  in  all  notices,  adver- 
tisements, and  other  official  publications  of  such  company, 
and  in  all  its  bills  of  exchange,  promissory  notes,  checks, 
orders  for  money,  bills  of  lading,  invoices,  receipts,  letters, 
and  other  writings,  used  in  the  transaction  of  the  business  of 
the  corporation. 

Omission  of  Word  "Limited." — §  36.  Every  omission  of  the 
word  "limited"  in  the  use  of  the  name  of  such  company 
shall  render  each  and  every  officer  or  director  in  such  com- 
pany personally  liable  for  any  indebtedness,  damage  or  lia- 
bility incurred  during  such  omission.  If  any  limited  liability 
company  under  this  act  does  not  paint  or  affix,  and  keep 
painted  or  affixed  its  name,  in  the  manner  above  set  forth,  it 
shall  be  liable  to  a  penalty  of  not  exceeding  twenty-five 
dollars  for  such  omission,  for  every  day  during  which  such 
name  is  not  so  kept  painted  or  affixed ;  and  every  director 
or  officer  of  such  company  who  shall  authorize  or  permit 
such  omission  shall  be  liable  to  a  like  penalty;  and  if  any 
director  or  officer  of  such  company,  or  any  person  on  its 
behalf,  shall  use  or  authorize  the  use  of  any  seal  purporting 
to  be  a  seal  of  the  company,  on  which  its  name  is  not  so  en- 
graved, as  aforesaid,  or  shall  use  or  authorize  the  issue  of  any 
notice,  advertisement,  or  other  official  publication  of  such 
company,  or  shall  sign  or  authorize  to  be  signed,  on  behalf 
of  such  company,  any  bill  of  exchange,  promissory  note, 
indorsement,  check,  order  for  money  or  goods,  invoice,  bill, 
receipt,  letter  of  credit  or  other  writing  of  the  company 
wherein  its  name  is  not  mentioned,  as  aforesaid,  he  shall  be 
liable  to  a  penalty  of  one  hundred  dollars.  The  penalties  in 
this  section  provided  shall  be  sued  for  in  the  name  of  the 
people  of  the  State  of  New  York  by  the  district  attorney  of 
the  county  in  which  the  principal  office  of  such  corporation 
is  located,  and  the  amounts  recovered  shall  be  paid  over  to 
the  proper  authorities  for  the  support  of  the  poor  of  such 
county. 


350  THE   LAW   OF   CORPORATIONS. 

Liability  of  Stockholder  in  Limited  Company ;  Definition  of  "  Stock- 
holder ;"  Execution;  Capital  Stock §    37.     In    limited    liability 

companies,  all  the  stockholders  shall  be  severally  individually 
liable  to  the  creditors  of  the  company  in  which  they  are 
stockholders,  to  an  amount  equal  to  the  amount  of  stock 
held  by  them,  respectively,  for  all  debts  and  contracts  made 
by  such  company,  until  the  whole  amount  of  capital  stock 
fixed  and  limited  by  such  company  has  been  paid  in,  and  a 
certificate  thereof  has  been  made  and  recorded  as  herein- 
after prescribed.  The  term  stockholder  as  used  herein  shall 
apply,  not  only  to  such  persons  as  appear  by  the  books  of 
the  corporation  or  association  to  be  such,  but  also  to  every 
equitable  owner  of  stock,  although  the  same  may  appear  on 
such  books  in  the  name  of  another  person,  and  also  to  every 
person  who  shall  have  advanced  the  instalments  or  purchase- 
money  of  any  stock  in  the  name  of  any  person  under  twenty- 
one  years  of  age,  and  while  such  person  remains  a  minor,  to 
the  extent  of  such  advance  ;  and  also  to  every  guardian  or 
other  trustee  who  shall  voluntarily  invest  any  trust  funds  in 
such  stock;  and  no  trust  funds  in  the  hands  of  such  guardian 
or  trustee  shall  be  in  any  way  liable  under  the  provisions  of 
this  act  by  reason  of  any  such  investment,  nor  shall  the  per- 
son for  whose  benefit  any  such  investment  may  be  made  be 
responsible  in  respect  to  such  stock  until  thirty  days  after 
the  time  when  such  persons  respectively  become  competent 
and  able  to  control  and  dispose  of  the  same ;  but  the  guar- 
dian or  other  trustee  making  such  investment  as  aforesaid 
shall  continue  responsible  as  a  stockholder  until  such  re- 
sponsibility devolves  upon  the  person  beneficially  interested 
therein  ;  and  in  respect  to  stock  held  by  a  guardian  or  other 
trustee  under  a  transfer  of  the  same  by  a  third  person,  or 
under  positive  directions  by  a  third  person  for  such  invest- 
ment, the  person  making  such  transfer  or  giving  such  direc- 
tions, and  his  executors  and  administrators  shall,  for  the 
purposes  of  this  act,  be  deemed  a  stockholder ;  and  the 
estate  of  such  person,  if  he  be  deceased,  shall  be  responsible 
for  the  debts  and  liabilities  chargeable  on  such  stock,  accord- 
ing to  the  provisions  of  this  act.     No  execution  shall  issue 


APPENDIX    B.  351 

against  any  stockholder  individually,  until  execution  has 
been  issued  against  the  corporation  and  returned  unsatisfied; 
and  whenever  a  judgment  shall  be  recovered  against  a  stock- 
holder individually,  all  the  stockholders  shall  contribute  a 
proportionate  share  of  the  amount  paid  by  such  stockholder 
on  such  judgment  proportioned  to  the  number  of  shares  of 
stock  owned  by  each  of  such  stockholders,  and  such  stock- 
holder shall  have  a  right  of  action  against  the  other  stock- 
holders in  such  corporation,  jointly  or  severally,  to  recover 
from  them,  and  each  of  them,  the  proportion  due  by  them 
and  each  of  them  of  the  amount  so  paid  on  such  judgment. 
The  capital  stock  of  every  such  limited  liability  company 
shall  be  paid  in,  one  half  thereof  within  one  year,  and  the 
other  half  thereof  within  two  years  from  the  incorporation 
of  said  company,  or  such  corporation  shall  be  dissolved- 
The  directors  of  every  such  company  within  thirty  days  after 
the  payment  of  the  last  instalment  of  the  capital  stock, shall 
make  a  certificate  stating  the  amount  of  the  capital  so  paid 
n,  which  certificate  shall  be  signed  and  sworn  to  by  the 
president  and  a  majority  of  the  directors;  and  they  shall, 
within  the  said  thirty  days,  record  the  same  in  the  office  of 
the  secretary  of  state,  and  of  the  county  in  which  the  princi- 
pal business  office  of  such  corporation  is  situated. 

Dissolution  not  to  Impair  Liability. — §  38.  The  dissolution 
for  any  cause  whatever,  of  any  corporation  created  as  afore- 
said, shall  not  take  away  or  impair  any  remedy  given  against 
such  corporation,  its  stockholders  or  offices,  for  any  liabilities 
incurred  previous  to  its  dissolution. 

Extension  of  Existence. — §39.  The  directors  of  any  manu- 
facturing corporation  organized  under  this  act,  who  may 
desire  within  one  year  from  the  date  of  the  original  certifi- 
cate of  such  manufacturing  corporation  to  extend  the  busi- 
ness of  such  corporation  beyond  that  mentioned  in  said 
original  certificate,  providing  that  the  proposed  extension  of 
said  business  shall  be  of  the  same  general  character  of  that 
stated  in,  and  which  might  have  been  properly  included  in 
said  original  certificate,  are  hereby  authorized  to  make  and 
file  an  amended  certificate  of  incorporation  to  conform  to  this 


352  THE   LAW   OF   CORPORATIONS. 

act ;  and  upon  the  making  and  filing  of  such  amended  cer- 
tificate, the  said  corporation  shall  be  deemed  and  taken  to  be 
a  manufacturing  corporation  for  all  purposes  stated  in  said 
amended  certificate  from  the  time  of  filing  said  original  cer- 
tificate,    [Added  by  Laws  of  1888,  chap.  513.] 


APPENDIX  C. 

Laws  of  1880,  chap.  542 — An  Act  to  provide  for 
raising  Taxes  for  the  Use  of  the  State  upon 
certain  Corporations,  Joint-Stock  Companies  and 
Associations. 

Laws  of  1881,  chap.  361 — An  Act  to  amend  Chapter 
Five  Hundred  and  Forty-two  of  the  Laws  i  »i 
Eighteen  Hundred  and  Eighty,  entitled  "  An  Act 
to  provide  for  raising  taxes  for  the  use  of  the 
State  upon  certain  Corporations,  Joint-Stock 
Companies  and  Associations." 

President  or  Treasurer  to  make  Annual  Report  to  Comptroller  on 
or  before  the  15th  day  of  November.  Where  no  Dividend  has  been 
declared,  Treasurer  and  Secretary  to  estimate  and  appraise  Capital 
Stock  and  forward  same  to  Comptroller.  Appeal. — SECTION  I. 
Hereafter  it  shall  be  the  duty  of  the  president  or  treasurer 
of  every  association,  corporation  or  joint-stock  company 
liable  to  be  taxed  on  its  corporate  franchise  or  business,  as 
provided  in  section  three  of  this  act,  to  make  report  in 
writing  to  the  comptroller  annually  on  or  before  the  fifteenth 
day  of  November,  stating  specifically  the  amount  of  capital 
paid  in,  the  date,  amount  and  rate  per  centum  of  each  and 
every  dividend  declared  by  their  respective  corporations, 
joint-stock  companies  or  associations  during  the  year  ending 
with  the  first  day  of  said  month.  In  all  cases  where  any 
such  corporation,  joint-stock  company  or  association  shall 
fail  to  make  or  declare  any  dividend  upon  either  its  common 
or  preferred  stock  during  the  year  ending  as  aforesaid,  or  in 
case  the  dividend  or  dividends  made  or  declared  upon  either 
its  common  or  preferred  stock  during  the  year  ending  as 
aforesaid  shall  amount  to  less  than  six  per  centum  upon  the 
par  value  of  the  said  common  or  preferred  stock,  the  treasurer 
and  secretary  thereof,  after  being  duly  sworn  or  affirmed  to 
do  and  perform  the  same  with  fidelity,  according  to  the  best 

353 


354 


THE   LAW   OF   CORPORATIONS. 


of   their  knowledge  and  belief,  shall,  between  the  first  and 
fifteenth  days  of  November,  in  each  year  in  which  no  divi- 
dend has  been  made  or  declared  as  aforesaid,  or  in  which 
the  dividend' or  dividends  made  or  declared  upon  either  its 
common  or  preferred  stock  amounted  to  less  than  six  per 
centum  upon  the  par  value  of   said   common  or  preferred 
stock,  estimate  and  appraise  the  capital  stock  of  such  com- 
pany upon  which  no  dividend  has  been  made  or  declared,  or 
upon  the  par  value  of  which  the  dividend  or  dividends  made 
.or  declared  amounted  to  less  than  six   per  centum,  at   its 
actual  value  in   cash,  not   less,  however,  than   the   average 
price  which  said  stock  sold  for  during  said  year ;  and  when 
the  same  shall  have  been  so  truly  estimated  and  appraised, 
they  shall  forthwith  forward  to  the  comptroller  a  certificate 
thereof,  accompanied  by  a  copy  of  their  said  oath  or  affirma- 
tion, by  them  signed,  and  attested  by  the  magistrate  or  other 
person  qualified  to  administer  the  same ;  provided,  that  if 
the  comptroller  is  not  satisfied  with  the  valuation  so  made 
and   returned,  he  is  hereby  authorized  and  empowered  to 
make  a  valuation  thereof  and  to  settle  an  account  upon  the 
valuation  so  made  by  him  for  the  taxes,  penalties  and  interest 
due  the  state  thereon  ;  and  any  association,  corporation  or 
joint-stock  company  dissatisfied  with  the  account  so  settled, 
may  within  ten  days  appeal  therefrom  to  a  board  consisting 
of  the  secretary  of  state,  attorney-general  and  state  treasurer, 
which   board,    on   such   appeal,   shall   affirm   or  correct  the 
account  so  settled  by  the  comptroller,  and  the  decision  of 
said  board  shall  be  final ;  but  such  appeal  shall  not  stay  pro- 
ceedings unless  the  full  amount  of  the  taxes,  penalties  and 
interest  as  due  on  said  account,  as  settled  by  the  comptroller, 
be  deposited  with  the  state  treasurer. 

Ten  per  cent,  to  be  added  to  Tax  in  Case  of  Failure  to  make  Report, 
etc.  Failure  for  Two  Successive  Years  to  be  reported  to  Governor. 
— §  2.  If  the  said  officers  of  any  such  corporation,  joint-stock 
company  or  association  shall  neglect  or  refuse  to  furnish  the 
comptroller,  on  or  before  the  15th  day  of  November  of  each 
and  every  year,  with  the  report  aforesaid,  or  the  certificate 
of  appraisement,  and  oath  or  affirmation,  as  the  case  may 
be,  as  required  by  the  first  section  of  this  act,  or  to  pay  the 


APPENDIX    C.  355 

tax  imposed  on  such  corporation,  company  or  association 
within  fifteen  days  after  the  first  of  January  as  provided  in 
the  fourth  section  of  this  act,  it  shall  be  the  duty  of  the 
comptroller  of  the  state  to  add  ten  per  centum  to  the  tax 
of  said  corporation,  company  or  association,  for  each  and 
every  year  for  which  such  report  or  certificate  of  appraise- 
ment and  oath  or  affirmation  were  not  so  furnished,  or  for 
which  such  tax  shall  not  have  been  paid,  which  percentage 
shall  be  assessed  and  collected  with  the  said  tax  in  the  usual 
manner  of  assessing  and  collecting  such  taxes;  provided  that 
if  said  officers  of  any  such  corporation,  joint-stock  company 
or  association  shall  intentionally  fail  to  comply  with  the 
provisions  of  the  first  or  fourth  section  of  this  act  for  one 
year,  the  comptroller  shall  report  the  fact  to  the  governor, 
who,  if  he  shall  be  made  satisfied  that  such  failure  was  in- 
tentional, shall  thereupon  direct  the  attorney-general  to  take 
proceedings,  in  the  name  of  the  people  of  this  state,  to 
declare  the  charter  or  privileges  of  said  corporation,  joint- 
stock  company  or  association  forfeited,  and  at  an  end  ;  and  for 
such  intentional  failure  duly  found,  the  charter  and  privileges 
of  every  such  corporation,  company  or  association  shall 
cease,  end,  and  be  determined. 

Annual  Tax;  Amount. — §  3.  Every  corporation,  joint-stock 
company  or  association  whatever,  now  or  hereafter  incorpo- 
rated, organized  or  formed  under,  by  or  pursuant  to  law  in 
this  state  or  in  any  other  state  or  country,  and  doing  busi- 
ness in  this  state,  except  only  savings-banks,  and  institutions 
for  savings,  life-insurance  companies,  banks,  foreign  insur- 
ance companies,  manufacturing  or  mining  corporations,  or 
companies  wholly  engaged  in  carrying  on  manufacture,  or 
mining  ores  within  this  state,  and  agricultural  and  horticul- 
tural societies  or  associations,  which  exceptions,  however, 
shall  not  include  gas  companies,  trust  companies,  electric  or 
steam  heating,  lighting  and  power  companies,  shall  be  liable 
to  and  shall  pay  a  tax,  as  a  tax  upon  its  franchise  or  business, 
into  the  state  treasury  annually,  to  be  computed  as  follows  : 
'If  the  dividend  or  dividends  made  or  declared  by  such  corpo- 
ration, joint-stock  company  or  association,  during  any  year 
ending  with  the  first  day  of  November,  amount   to  six   or 


356  THE   LAW    OF   CORPORATIONS. 

more  than  six  per  centum  upon  the  par  value  of  its  capital 
stock,  then  the  tax  to  be  at  the  rate  of  one-quarter  mill  upon 
the  capital  stock  for  each  one  per  centum  of  dividends  so 
made  or  declared  ;  or  if  no  dividend  be  made  or  declared, 
or  if  the  dividend  or  dividends  made  or  declared  do  not 
amount  to  six  pe.r  centum  upon  the  par  value  of  said  capital 
stock,  then  the  tax  to  be  at  the  rate  of  one  and  one-half  mills 
upon  each  dollar  of  the  valuation  of  the  said  capital  stock 
made  in  accordance  with  the  provisions  of  the  first  section 
of  this  act ;  and  in  case  any  such  corporation,  joint-stock 
company  or  association  shall  have  more  than  one  kind  of 
capital  stock,  as,  for  instance,  common  and  preferred  stock, 
and  upon  one  of  said  stocks  a  dividend  or  dividends,  amount- 
ing to  six  or  more  than  six  per  centum  upon  the  par  value 
thereof,  has  been  made  or  declared,  and  upon  the  other  no 
dividend  has  been  made  or  declared,  or  the  dividend  or 
dividends  made  or  declared  thereon  amount  to  less  than  six 
per  centum  upon  the  par  value  thereof,  then  the  tax  shall 
be  at  the  rate  of  one-quarter  mill  for  each  one  per  centum 
of  dividend  made  or  declared  upon  the  capital  stock  upon 
the  par  value  of  which  the  dividend  or  dividends  made  or 
declared  amount  to  six  or  more  than  six  per  centum,  and  in 
addition  thereto  tax  shall  be  charged  at  the  rate  of  one  and 
and  one-half  mills  upon  each  dollar  of  a  valuation  made  also 
in  accordance  with  the  provisions  of  this  act,  of  the  capital 
stock  upon  which  no  dividend  was  made  or  declared,  or 
upon  the  par  value  of  which  the  dividend  or  dividends  made 
or  declared  did  not  amount  to  six  per  centum.  {Thus 
amended  by  Lazes  of  1889,  chap.  353.] 

When  Tax  to  be  Paid. — §4.  It  shall  be  the  duty  of  the 
treasurer  or  other  officer  having  charge  of  any  corporation, 
joint-stock  company  or  association,  upon  which  a  tax  is  im- 
posed by  either  of  the  preceding  sections  of  this  act,  to 
transmit  the  amonnt  of  said  tax  to  the  treasury  of  the  state 
within  fifteen  days  after  the  first  day  of  January  in  each  and 

every  year. 

Officers  of  Insurance  Companies  to  make  Reports  Semi-annually; 
what  to  Contain;  Amount"of  Tax. — §  5.  Hereafter  it  shall  be  the 
duty  of  the  president,  secretary  or  other  proper  officer  of 


APPENDIX   C.  357 

every  insurance  company  and  every  association  organized  or 
incorporated  by  or  under  any  law  of  this  state,  and  of  every 
person  or  partnership  doing  an  insurance  business  in  this 
state  (except  life-insurance  companies,  and  purely  mutual 
beneficial  associations,  whose  fund  for  the  benefit  of  mem- 
bers, their  families  or  heirs,  is  made  up  entirely  of  contri- 
butions of  their  members,  and  the  accumulated  interest 
thereon),  to  make  report  in  writing  to  the  comptroller 
annually  upon  the  first  day  of  August  in  each  year,  after 
the  first  day  of  August,  eighteen  hundred  and  eighty-one, 
setting  forth  the  entire  amount  of  premiums  received  on 
business  done  in  this  state  by  such  company,  or  association, 
person  or  partnership  during  the  year  ending  with  the  pre- 
ceding thirtieth  day  of  June,  whether  the  said  premiums 
were  in  money  or  in  the  form  of  notes,  credits,  or  any  other 
substitute  for  money,  and  every  such  company,  association, 
•person  or  partnership  shall  pay  into  the  state  treasury,  at 
the  date  aforesaid,  a  tax,  as  a  tax  on  its  corporate  franchise 
or  business,  at  the  rate  of  eight-tenths  of  one  per  centum 
upon  the  gross  amount  of  said  premiums.  And  every  com- 
pany or  association' organized  under  the  laws  of  any  other 
state  or  country,  and  every  person  or  partnership  doing  an 
insurance  business  in  this  state,  except  as  aforesaid,  shall 
pay  into  the  treasury  on  the  first  day  of  August  in  each 
year  a  tax  at  the  rate  of  eight-tenths  of  one  per  centum  on 
their  gross  premiums  received  by  them  on  business  trans- 
acted in  this  state  during  the  year  ending  with  the  preceding 
thirtieth  day  of  June,  whether  the  said  premiums  were  in 
money  or  in  the  form  of  notes,  credits  or  any  other  substi- 
tutes, for  money.  And  every  such  company,  association, 
person,  partnership,  or  the  agents  and  officers  thereof  in  this 
state,  shall  make  report  in  writing  to  the  comptroller  an- 
nually upon  the  first  day  of  August  in  each  year,  setting 
forth  the  entire  amount  of  premiums  received  during  the 
period  aforesaid.  Provided,  that  the  reports  above  required 
shall  be  made  under  oath  or  affirmation,  and  that  it  shall  be 
the  duty  of  the  comptroller  of  the  state  to  add  ten  per 
centum  to  the  account  of  any  company,  association,  person 
or  partnership  which  shall  neglect  or  refuse  for  a  period  of 


358  THE    LAW    OF   CORPORATIONS. 

thirty  days  to  make  the  said  report,  or  to  pay  into  the  state 
treasury  the  tax  imposed  by  this  section.  And  it  shall  also 
be  the  duty  of  the  president,  secretary,  or  other  proper 
officer  of  each  and  every  insurance  company,  association, 
partnership,  and  of  every  person  liable  to  be  taxed  under 
this  section,  to  make  a  report  in  writing  to  the  comptroller 
on  the  first  day  of  August,  eighteen  hundred  and  eighty- 
one,  under  oath  or  affirmation,  of  the  entire  amount  of  pre- 
miums received  on  business  done  in  this  state  during  the 
six  months  ending  with  the  preceding  thirtieth  day  of  June, 
and  to  pay  a  tax  at  the  rate  of  eight-tenths  of  one  per 
centum  thereon.  And  it  shall  be  the  duty  of  the  comp- 
troller of  the  state  to  add  ten  per  centum  to  the  account  of 
any  company,  association,  person  or  partnership,  which  shall 
neglect  or  refuse  for  a  period  of  thirty  days  to  make  the  said 
report,  or  to  pay  into  the  state  treasury  the  tax  imposed. 

Tax  on  Railroad,  Express,  Navigation  and  other  Companies. — §  6. 
In  addition  to  the  taxes  above  provided  for,  every  corpora 
tion  formed  for  railroad,  canal,  steamboat,  ferry,  express, 
navigation  or  transportation  purposes,  and  every  elevated 
railway  company,  and  every  other  corporation,  joint-stock 
company  or  association  now  or  hereafter  incorporated  or 
organized  by  or  under  any  law  of  this  state,  or  now  or  here- 
after incorporated  or  organized  by  or  under  the  laws  of  any 
other  state  or  country  and  doing  business  in  this  state,  and 
owning,  operating  or  leasing  to  or  from  another  corporation, 
joint-stock  company  or  association,  any  railroad,  canal, 
steamboat,  ferry,  express,  navigation,  pipe  line  or  transpor- 
tation route  or  line,  or  elevated  railway,  or  other  device  for 
the  transportation  of  freight  or  passengers,  or  in  any  way 
engaged  in  the  business  of  transporting  freights  or  passen- 
gers, and  every  telegraph  company  or  telephone  company 
incorporated  under  the  laws  of  this  or  any  other  state,  and 
doing  business  in  this  state,  and  every  express  company  or 
association,  palace  car  or  sleeping  car  company  or  associa- 
tion incorporated  or  unincorporated,  doing  business  in  this 
state,  shall  pay  to  the  state  treasurer  for  the  use  of  the  state, 
as  a  tax  upon  its  corporate  franchise  or  business  in  this 
state,  a  tax,  at  the    rate  of    five-tenths  of   one   per  centum 


APPENDIX   C.  359 

upon  the  gross  earnings  in  this  state  of  said  corporation  or 
company  or  association,  for  tolls,  transportation,  telegraph, 
telephone  or  express  business  transacted  in  this  state. 

Tax  to  be  Paid  Semi-annually;  Treasurer  to  render  Statement  under 
Oath. — §  7.  The  tax  imposed  under  section  six  of  this  act 
shall,  after  the  first  day  of  August,  eighteen  hundred  and 
eighty-one,  be  paid  annually  on  the  first  day  of  August  of 
each  year.  It  shall  be  the  duty  of  the  president,  secretary 
or  other  proper  officer  of  the  corporations,  joint-stock  com- 
panies or  associations  referred  to  in  section  six  of  this  act  to 
transmit  to  the  comptroller,  on  the  first  day  of  August  in 
each  year,  a  statement  under  oath  or  affirmation  of  the 
amount  of  the  gross  earnings  of  the  said  associations,  cor- 
porations or  joint-stock  companies  derived  from  all  sources 
during  the  year  ending  with  the  preceding  thirtieth  day  of 
June,  together  with  the  amount  of  tax  imposed  thereon  by 
section  six.  And  it  shall  also  be  the  duty  of  the  president, 
secretary  or  other  proper  officer  of  the  corporations,  joint- 
stock  companies  or  associations  referred  to  in  section  six  of 
this  act,  to  transmit  to  the  comptroller  on  the  first  day  of 
August,  eighteen  hundred  and  eighty-one,  a  statement  un- 
der oath  or  affirmation  of  the  amount  of  the  gross  earnings 
of  the  said  associations,  corporations  or  joint-stock  com- 
panies derived  from  all  sources  during  the  six  months  ending 
with  the  thirtieth  day  of  June,  eighteen  hundred  and  eighty- 
one,  together  with  the  tax  imposed  thereon  by  section  six 
of  this  act.  And  if  any  such  corporation,  joint-stock  com- 
pany or  association  shall  neglect  or  refuse,  for  a  period  of 
thirty  days  after  any  tax  imposed  by  sections  six  or  seven 
of  this  act  becomes  due,  to  make  returns  or  to  pay  the  same, 
the  amount  thereof,  with  the  addition  of  ten  per  centum 
thereto,  shall  be  collected  for  the  use  of  the  state  as  other 
taxes  are  recoverable  by  law  from  such  corporation,  joint- 
stock  company  or  association. 

Lands    and    Real    Estate   to    be   Taxed,  but   Capital    Stock   to   be 

Exempt — g  8.  The  corporations,  joint-stock  companies  and 
associations  mentioned  in  this  act  as  taxable  shall  hereafter 
be  exempt  from  assessment  and  taxation  for  state  purposes, 
except   upon   their  real  estate  and  as  herein  provided  ;  but 


360  THE   LAW    OF   CORPORATIONS. 

they  shall  in  all  other  respects  be  liable  to  assessment  and 
taxation  as  heretofore. 

How  Taxes  to  be  Applied. — §  9.  The  taxes  imposed  by  this 
act,  and  the  revenue  derived  therefrom,  shall  be  applicable 
to  the  payment  of  the  ordinary  and  current  expenses  of  the 
state,  and  if  any  corporation,  joint-stock  company,  person, 
partnership  or  association  shall  neglect  or  refuse  to  pay  any 
tax  by  this  act  required  to  be  paid,  the  same  may  be  sued 
for  in  the  name  of  the  people  of  the  state,  and  recovered  in 
any  court  of  competent  jurisdiction,  in  an  action  to  be 
brought  by  the  attorney-general  at  the  instance  of  the  comp- 
troller. 

Saving  Clause. — §  io.  All  obligations,  liabilities,  and  taxes 
heretofore  incurred  or  imposed  under  said  act,  chapter  five 
hundred  and  forty-two  of  laws  of  eighteen  hundred  and 
eighty,  are  saved,  and  shall  be  enforced  as  if  the  said  act  had 
not  been  hereby  amended. 

Amount  of  Capital  Employed  here  to  be  Basis  of  Tax ;  Report  to 
state  same ;  if  Dissatisfied,  Comptroller  may  Fix  Amount. — §  1 1 . 
The  amount  of  capital  stock  which  shall  be  the  basis  for  tax 
under  the  provisions  of  section  three  of  this  act,  in  the  case 
of  every  corporation,  joint-stock  company  and  association 
liable  to  taxation  thereunder,  shall  be  the  amount  of  capital 
stock  employed  within  this  state.  In  making  to  the  comp- 
troller the  report  in  writing  or  certificate  of  estimate  and 
appraisal  of  the  capital  stock  of  such  corporation,  joint-stock 
company  or  association  provided  for  by  the  first  section  of 
this  act,  it  shall  be  the  duty  of  the  president  or  treasurer 
thereof,  as  the  case  may  be,  to  state  specifically  the  amount 
of  capital  stock  employed  within  this  state,  of  such  corpora- 
tion, joint-stock  company  or  association.  Whenever  the 
comptroller  is  dissatisfied  with  such  report  or  certificate  of 
estimate  and  appraisal,  as  the  case  may  be,  of  any  corpora- 
tion, joint-stock  company  or  association  whose  capital  is  only 
partially  employed  within  this  state,  he  is  authorized  and 
empowered  to  ascertain,  fix  and  determine  the  amount  of 
capital  employed  within  this  state,  and  to  settle  an  account 
for  the  taxes  and  penalties  due  the  state  thereon.     {Added 


APPENDIX   C.  361 

by  Lazes  of  18S2,  chap.  151,  and  thus  amended  by  Laws  of 
1885,  chap.  501.] 

On  Failure  to  make  Report,  etc.,  Comptroller  may  Examine  Books, 
etc. — §  12.  Whenever  any  corporation,  joint-stock  company 
or  association  liable  to  make  reports  or  certificates  of  esti- 
mate and  appraisal  to  the  comptroller,  under  any  of  the  pro- 
visions of  this  act,  shall  neglect  or  refuse  to  make  such 
report  or  reports  within  the  time  prescribed  in  this  act,  or 
shall  make  such  report  or  certificate  as  shall  be  unsatisfactory 
to  the  comptroller,  the  comptroller  is  authorized  to  examine, 
or  cause  to  be  examined,  the  books  and  records  of  any  such 
corporation,  joint-stock  compa'ny  or  association*  and  to  fix 
and  determine  the  amount  of  tax  and  penalty  due  in  pursu- 
ance of  the  provisions  of  this  act,  either  from  the  said  books 
and  records,  or  from  any  other  data  in  his  possession  which 
shall  be  satisfactory  to  him,  and  to  settle  an  account  for  said 
tax  and  penalty,  together  with  the  expenses  of  such  exami- 
nation, against  said  corporation,  joint-stock  company  or 
association.  [Added  by  Lazes  of  1882,  chap.  151,  and  thus 
amended  by  Laws  of  1885,  chap.  501.] 

Comptroller  may  Issue  Subpoena  ;  Punishment  for  Failure  to  Obey. 
— §  13.  Whenever  the  comptroller  shall  deem  it  necessary  or 
important  to  examine  any  person  as  a  witness  upon  any  sub- 
ject or  matter  relating  to  the  amount  of  capital  stock  of  such 
corporation,  or  to  use,  examine  or  inspect  any  book,  account, 
voucher  or  document  in  possession  of  any  officer  of  such 
corporation,  or  other  person,  or  under  his  control,  relating  to 
such  capital  stock  and  tax,  he  shall  have  the  power  to  issue 
a  subpoena  in  proper  form,  commanding  such  person  or 
officer  to  appear  before  him  or  some  person  designated  as 
commissioner  by  him  by  an  appointment  in  writing,  filed 
in  the  office  of  such  comptroller,  at  a  time  and  at  the  place 
where  the  principal  office  of  such  corporation  is  situated 
within  this  state  in  such  subpoena  specified,  to  be  examined 
as  a  witness,  and  such  subpoena  may  contain  a  clause  requir- 
ing such  person  or  officer  to  produce  on  such  examination 
all  books,  papers  and  documents  in  his  possession  or  under 
his  control,  relating  to  the  capital  stock  of  such  corporation 
and  the  amount  thereof  employed  within  this  state.     Such 


362  THE   LAW    OF   CORPORATIONS. 

subpoena  shall  be  served  upon  the  person  named  by  showing 
him  the  original  subpoena  and  delivering  to  and  leaving  with 
him  at  the  same  time  a  copy  thereof.  The  comptroller  or 
the  commissioner  so  designated  by  him  as  aforesaid  may 
administer  oaths  to  such  persons  as  he  may  desire  to  exam- 
ine, so  brought  before  him  by  subpoena  or  otherwise,  and 
examine  them  on  oath  in  relation  to  any  matter  which  may 
in  any  wise  be  material  in  determining  the  amount  of  the 
tax  to  be  paid  by  any  such  corporation,  joint-stock  company 
or  association  as  aforesaid.  Whenever  any  person  duly  sub- 
poenaed to  appear  and  give  evidence  as  aforesaid,  or  to  pro- 
duce any  books  and  papers  as  hereinbefore  provided,  shall 
neglect  or  refuse  to  appear  or  to  produce  such  books  and 
papers  according  to  the  exigency  of  such  subpoena,  or  shall 
refuse  to  testify  before  said  comptroller  or  the  commissioner 
so  designated  by  him,  or  to  answer  any  proper  and  pertinent 
question,  he  shall  be  deemed  in  contempt,  and  thereupon 
any  justice  of  the  supreme  court  of  the  judicial  district  within 
which  the  principal  office  of  such  corporation  within  this 
state  is  situated  shall,  upon  the  motion  of  the  comptroller, 
based  upon  affidavit  showing  the  commission  of  the  offense, 
either,  first,  make  an  order  requiring  the  accused  to  show 
cause  before  him,  at  a  time  and  place  specified  therein,  why 
the  accused  should  not  be  punished  for  the  alleged  offense  ; 
or,  second,  issue  a  warrant  of  attachment  directed  to  the 
sheriff  of  a  particular  county,  or  generally  directed  to  the 
sheriff  of  any  county  where  the  man  may  be  found,  command- 
ing him  to  bring  him  before  said  justice  either  forthwith  or 
at  a  time  and  place  therein  specified,  to  answer  for  the 
alleged  offense.  On  the  return  of  said  attachment  and  the 
production  of  the  body  of  the  defendant  therein  the  said 
justice  shall  have  jurisdiction  in  the  matter,  and  the  person 
charged  may  purge  himself  of  the  contempt  in  the  same 
way,  and  the  same  proceedings  shall  be  had,  and  the  same 
penalties  may  be  imposed  and  the  same  punishments  inflicted 
as  in  the  case  of  a  witness  subpoenaed  to  appear  and  give 
evidence  as  is  prescribed  in  title  three,  chapter  seventeen  of 
the  Code  of  Civil  Procedure,  in  proceedings  to  punish  a  con- 
tempt of  court  other  than  a  criminal  contempt.     {Added  by 


APPENDIX   C.  363 

Laws  of  1882,  chap.  151,  and  thus  amended  by  Lazes  of  1885 
chap.  501.] 

Comptroller  may  Adjust  Accounts  for  Taxes  and  Penalties  since 
May  12,  1882;  Proviso  as  to  Payment. — Jj  14.  The  comptroller 
is  hereby  authorized  and  directed,  upon  application  to  him 
made  by  any  corporation,  joint-stock  company  or  associa- 
tion, to  make,  settle  and  adjust  all  accounts  against  such 
corporation,  joint-stock  company  or  association,  for  all 
taxes  and  penalties  arising  under  the  third  section  of  this 
act  since  the  twelfth  day  of  May,  A.D.  eighteen  hundred 
and  eighty-two,  by  taking  as  a  basis  for  taxation  the  capital 
employed  within  the  state  by  such  corporation,  joint-stock 
company  or  association.  Provided,  however,  that  such 
corporation,  joint-stock  company  or  association  shall  not  be 
entitled  to  the  benefit  of  a  settlement  upon  such  basis  unless 
it  shall  have  secured  such  adjustment  and  paid  into  the 
treasury  the  full  amount  of  the  taxes  so  settled  before  the 
first  day  of  August,  eighteen  hundred  and  eighty-five,  nor 
shall  this  section  apply  to  the  case  of  any  tax  for  which  suit 
shall  have  been  heretofore  brought  by  the  attorney-general, 
in  which  suit  the  trial  has  been  commenced,  or  in  which 
judgment  shall  have  been  entered  heretofore  for  the  people 
for  the  amount  of  said  tax.  Any  corporation,  joint-stock 
company  or  association  whose  capital  has  heretofore  been, 
only  partially  employed  within  this  state,  and  which  is  now 
liable  for  taxes  arising  under  the  third  section  of  this  act 
since  the  twelfth  day  of  May  A.  D.  eighteen  hundred  and 
eighty  two,  and  which  are  still  due  and  unpaid,  may,  at  any 
time  prior  to  the  first  day  of  August,  eighteen  hundred  and 
eighty-five,  pay  to  the  state  treasurer,  for  the  use  of  the 
state,  in  full  discharge  of  the  same,  such  sum  of  money  as 
shall  be  fixed  by  the  comptroller  as  the  tax  due  for  the  said 
period  by  the  said  corporation,  joint-stock  company  or 
association,  upon  the  basis  of  the  capital  employed  within 
the  state.  Provided,  that  this  section  shall  not  apply  to  the 
case  of  any  tax  for  which  suit  may  have  heretofore  been 
brought  by  the  attorney-general,  and  for  which  judgment 
shall  have  been  entered  therein,  or  if  in  such  suit  trial  has 
been  commenced.     [Added  by  Lazvs  of  1885,  chap.  501.] 


364  THE    LAW    OF    CORPORATIONS. 

Interest. — §  1 5.  All  accounts  hereafter  settled  by  the 
comptroller  agreeably  to  the  provisions  of  this  act  shall  bear 
interest  from  a  date  thirty  days  after  the  sending  of  notice 
of  settlement,. hereinafter  provided  for,  until  full  payment 
thereof  shall  be  made.     [Added  by  Laws  of  1885,  chap.  501.] 

Notice  to  be  given   before   making    Settlement  of  Taxes. — §     1 6. 

It  shall  be  the  duty  of  the  comptroller  after  making  with 
any  partnership,  corporation,  joint-stock  company  or  associa- 
tion, liable  to  taxation  under  any  of  the  provisions  of  this 
act,  the  settlement  of  such  taxes,  to  forthwith  send  notice 
hereof  in  writing,  to  such  person,  partnership,  corporation, 
joint-stock  company  or  association,  which  notice  may  be 
sent  by  mail  to  the  post-office  address  of  such  corporation, 
joint-stock  company  or  association.  [Added  by  Laws  of 
1885,  chap.  501.] 

Regulations  as  to  Writ  to  Review  Determination  of  Comptroller. 

§  1  j.  No  writ   of  certiorari  to   review  the  determination 

and  settlement  of  the  comptroller  as  to  the  amount  of 
capital  used  within  the  state  by  any  corporation,  joint-stock 
company  or  association,  and  as  to  the  tax  and  penalty  to  be 
paid  thereon,  shall  be  granted,  except  application  therefor 
be  made  within  thirty  days  after  service  upon  such  corpora- 
tion, joint-stock  company  or  association  by  the  comptroller 
of  notice  of  such  settlement.  Nor  shall  any  such  writ  be 
granted  except  the  papers  upon  which  motion  therefor  is  to 
be  made,  including  notice  of  motion,  shall  have  been  served 
upon  the  comptroller  at  least  eight  days  before  such  motion, 
nor  unless  the  corporation,  joint-stock  company  or  associa- 
tion applying  for  such  writ  shall,  before  making  such  motion, 
have  deposited  with  the  state  treasurer  the  full  amount  of 
taxes,  penalties  and  charges  so  settled  and  adjusted  by  the 
comptroller,  and  filed  with  him  an  undertaking  in  such 
amount,  and  with  sufficient  sureties  as  shall  be  approved  by 
one  of  the  justices  of  the  supreme  court  of  this  state,  to  the 
effect  that  if  said  writ  be  vacated  and  the  determination  of 
the  comptroller  sustained,  the  applicant  for  the  writ  will 
make  payment  of  all  costs  and  charges  which  may  accrue 
against   such    applicant    in    the    prosecution    of   such    writ, 


APPENDIX   C.  365 

including   costs   on   all   appeals.     {Added  by  Lazes  of  1885, 
chap.  501.] 

After  Thirty  Days  Comptroller  may  Issue  Warrant  for  Collection  ; 
How  Warrant  Enforced. — §  1 8.  After  the  expiration  of  thirty 
days  from  the  service  by  the  comptroller  of  notice  of  the 
settlement  aforesaid,  if  no  proceedings  shall  have  been  taken 
to  review  the  same,  as  provided  by  this  act,  or  if  the  deposit 
with  the  state  treasurer  of  the  amount  of  the  said  settle- 
ment, together  with  the  undertaking,  as  provided  for  by 
this  act,  shall  not  then  have  been  made,  it  shall  be  lawful 
for  the  comptroller  to  issue  life  warrant  or  warrants  under 
his  hand  and  seal  of  office  directed  to  the  sheriff  of  any 
county  in  this  state,  commanding  him  to  levy  upon  and  sell 
the  goods  and  chattels,  lands  and  tenements  of  the  said 
corporation,  joint-stock  company  or  association  found  with- 
in the  said  county,  for  the  payment  of  the  amount  of  said 
settlement,  together  with  interest  thereon  and  costs  of  exe- 
cuting such  warrant,  and  to  return  the  said  warrant  to  the 
comptroller,  and  pay  to  the  state  treasurer  the  money  which 
shall  be  collected  by  virtue  thereof,  by  a  certain  time  therein 
to  be  specified,  not  less  than  sixty  days  from  the  date  of 
such  warrant.  Such  warrant  shall  be  a  lien  upon  and  shall 
bind  the  personal  estate  of  the  person,  partnership,  corpora- 
tion, joint-stock  company  or  association  against  whom  it  shall 
be  issued,  from  the  time  an  actual  levy  shall  be  made  by 
virtue  thereof,  and  the  sheriff  to  whom  such  warrant  shall 
be  directed  shall  proceed  upon  the  same  in  all  respects  with 
the  like  effect  and  in  the  same  manner  as  prescribed  by  law 
in  respect  to  executions  issued  against  property  upon  judg- 
ments rendered  by  a  court  of  record,  and  shall  be  entitled  to 
the  same  fees  and  costs  for  his  services  in  executing  the 
same,  to  be  collected  in  the  same  manner.  [Added  by 
Laws  of  1885,  chap.  501.] 

Comptroller  may  Revise  Accounts  in  certain  cases. — £  1 9.  The 
comptroller  may  at  any  time  revise  and  readjust  any  account 
theretofore  settled  against  any  person,  association,  corpora- 
tion, or  joint-stock  company  by  himself  or  any  preceding 
comptroller  for  taxes  arising  under  this  act  or  the  act  to 
which  it  is  an  amendment  whenever  it  shall  be  made  to  ap- 


366  THE   LAW   OF   CORPORATIONS. 

pear  by  evidence  submitted  to  him  that  the  same  has  been 
illegally  paid,  or  so  made  as  to  include  taxes  which  could 
not  have  been  lawfully  demanded,  and  shall  resettle  the  same 
according  to  law  and  the  facts  and  charge  or  credit  as  the 
case  may  require  the  difference,  if  any,  resulting  from  such 
revision  and  resettlement  upon  the  current  accounts  of  such 
person,  association,  corporation  or  joint-stock  company. 
[Added  by  Laws  of  1889,  chap.  463.] 

Comptroller's  Action  may  be  Reviewed. — §  20.  The  action  of 
the  comptroller  upon  any  application  made  to  him  by  any  per- 
son or  corporation  for  a  revision  and  resettlement  of  ac- 
counts as  provided  in  this  act,  may  be  reviewed,  both  upon 
the  law  and  the  facts  upon  certiorari  by  the  Supreme  Court 
at  the  instance  either  of  the  party  making  such  application 
or  of  the  attorney-general  in  the  name  and  in  behalf  of  the 
people  of  this  state,  and  for  that  purpose  the  comptroller 
shall  return  to  such  certiorari  the  accounts  and  all  the  evi- 
dence submitted  to  him  on  such  application,  and,  if  the  or- 
iginal or  resettled  accounts  shall  be  found  erroneous  or  il- 
legal by  that  court  either  in  point  of  law  or  of  fact  the  said 
accounts  shall  be  there  corrected  and  restated  by  the  said 
Supreme  Court  and  from  any  such  determination  of  the 
Supreme  Court  an  appeal  may  be  taken  by  either  party  to 
the  Court  of  Appeals  as  in  other  cases.  [Added  by  Laws  of 
1889,  chap.  463.] 


APPENDIX  D. 

FORMS. 

The  following  embrace  the  most  important  forms  neces- 
sary to  be  used  in  the  organization  and  conduct  of  the  busi- 
ness of  corporations,  and  may  be  varied  to  apply  to  the  dif- 
ferent classes  of  corporations.  For  convenience  in  tran- 
scribing or  dictating,  numbers,  corresponding  to  the  blank 
spaces,  are  inserted  in  each  form. 

I. 

Certificate   of  Incorporation    under  the   Manufacturing  Act. 

State  of  New  York  ) 

(City  and)  County  V  ss.: 

of  (i)  ,       ) 

We  (2)  [insert  names  of  corporators  in  full']  do  by  these 
presents  associate  ourselves  together  to  form  a  company 
pursuant  to  and  in  conformity  with  chapter  forty  of  Laws  of 
eighteen  hundred  and  forty  eight,  entitled  "  An  Act  to  Au- 
thorize the  Formation  of  Corporations  for  Manufacturing, 
Mining,  Mechanical  or  Chemical  Purposes,"  and  the  several 
acts  supplementary  thereto  and  amendatory  thereof,  and  for 
that  purpose,  we  do  hereby  declare  : 

I.  The    corporate    name    of    the    said    company    shall 

be  (3) 

II.  The  objects  for  which  the  company  shall  be  formed 

are  (4) 

III.  The  capital  stock  of  said  company  shall  be  (5) 
dollars. 

IV.  The  said  company  shall  commence  its  existence 
upon  the  filing  this  certificate    [or,  on  the  day  of 

18     J  and  shall  continue  for  (6)    [not  exceeding  fifty]  years 
[or  shall  terminate  on  the  day  of  .] 

V.  The  number  of  shares  of  stock  of  said  company  shall 
be  (7)  and  the  par  value  of  each  share  shall  be  (8) 

dollars. 

367 


3^8  THE   LAW    OF   CORPORATIONS. 

VI.  The  number  of  trustees  shall  be  (9)  [not  less  than  three 
nor  more  than  thirteen]  and  the  names  of  those  who  shall 
manage  the  affairs  of  the  company  for  the  first  year  are  (10) 
{insert  names  dnd  residences  of  trustees']. 

VII.  The  names  of  the  town  and  county  in  which  the 
operations  of  the  company  shall  be  carried  on  are  (11)  [state 
place,  and  add  if  necessary]  [and  such  other  places  within  and 
without  this  state  as  the  trustees  may  from  time  to  time 
designate]  (or)  [a  part  of  the  business  of  said  company  is  to 
be  carried  on  at  (12)  without  this  state].  Witness 
our'hands  and  seals  this  (13)  day  of 

[Names  of  Corporators]. 

State  of  New  York,  ) 
(City  and)  County  \  ss.: 
of  ) 

On  the  (14)  before  me  personally  appeared  (15) 

[insert  names  of  corporators]  known  to  me  to  be  the  indi- 
viduals described  in  and  who  executed  the  foregoing  certifi- 
cate and  severally  acknowledged  that  they  executed  the  same. 
In  witness  whereof  I  have  hereunto  set  my  hand  and 
official  seal  this  day  of 

Notary  Public, 
(or  Comr  of  Deeds.) 

II. 

Preliminary  Certificate  under  the  Business  Act. 

State  of  New  York,  ) 

(City  and)  County  of  (i)  ,  f  ss"' 

We,  the  undersigned  (2)  ,  of  the  city  of  (3)  , 

and  of   the  city  of   (4)  ,  a   majority  of   whom  are 

citizens  and  residents  of  this  State,  being  desirous  of  forming 
a  company  in  the  class  of  (5)  [limited  or  full]  liability,  in 
accordance  with  the  provisions  of  an  act  of  the  Legislature 
of  the  State  of  New  York,  entitled  "  An  Act  to  provide  for  the 
Organization  and  Regulation  of  certain  Business  Corpora- 
tions, "  passed  June  21st,  1875,  and  the  acts  amendatory 
thereof  do  hereby  certify, 

That  the  name  of  the  proposed  corporation  shall  be  (6) 


APPENDIX    D.  369 

[give  name  in  full,  with  the  addition  of  the  word  "  Limited," 
if  it  be  in  that  class] . 

That  the  object  for  which  it  is  to  be  formed  is  (7) 
[state  the  nature  of  the  business  to  be  carried  on],  and  place 
of  business  thereof,  is  to  be  at  (8)  in  the  County  of 

(9)  and  State  of  (10) 

That  the  amount  of  the  capital  stock  of  said  corporation 
shall    be  (11)  dollars.      [If  not   all  cash,  state  here 

what  proportion   is  to  be  represented  by  money  and  what  by 
property,  describing  it.] 

That  the  number  of  shares  of  which  said  capital  shall 
consist    is    (12)  ,   of  the    par  value  of  (13) 

dollars  each.     [Not  less  than  $10  nor  more  than  $100  each]. 

That  the  location  of  the  principal  business  office  of  said 
Corporation  is  to  be  at  (14)  ,  State  of  New  York. 

That  the  duration  of  said  Corporation  is  to  be  for  the 
term  of  (15)  [not  exceeding  fifty]  years. 


State  of  New  York, 
(City  and)  County  of  (i)  ,  \ss- 

On  this  (16)  before  me  personally  appeared  (17), 

known   to  me  to   be  the  persons  described  in  and 

who  executed  the  foregoing  instrument,  and  who  severally 

acknowledged  to  me  that  they  executed  the  same  for  the 

purposes  therein  set  forth. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and 
affixed  my  official  seal,  this day  of . 


Notary  Public, 
{or  Conir  of  Deeds.) 
III. 

License  under  the  Business  Act. 

State  of  New  York,  ) 

Office  of  the  Secretary  of  State,  j  ss"' 

WHEREAS,  an  application  for  the  formation  of  a  corpo- 
ration in  the  class  of liability,  under  the  cor- 


37<D  THE   LAW   OF   CORPORATIONS. 

porate  name  — ■ pursuant  to  the  pro- 
visions of  Chapter  611,  Laws  of  1875,  entitled  "An  act  to 
provide  for^the  organization  and  regulation  of  certain  busi- 
ness corporations,"  was  filed  in  this  office  on  the day 

of ,  A.D.   189— 

/  therefore  License  and  Appoint 

Commissioners  to  open  books  for  subscriptions  to  the  capi- 
tal stock  of  such  corporation,  agreeably  to  the  requirements 
of  the  said  act. 

Witness  my  hand  and  the  Seal  of  office 
of  the  Secretary  of  State,  at  the  city 

of  Albany,  this day  of , 

189—. 


Secretary  of  State. 

IV. 

Commissioners  Report  and  Record  of  Proceedings. 

State  of  New  York,  \  ss  . 

(City  and)  County  of  (i)  ,  \     " 

We,  the  undersigned,  duly  appointed  and  empowered  by 
License  the  Secretary  of  State  of  the  State  of  New  York,  by 
bearing    date    of    the   (2)  Commissioners    to    open 

books  for  subscriptions  to  the  capital  stock  of  (3)  [full,  or 
limited]  liability  company,  to  be  known  under  the  corporate 
name  of  (4)  [state  name  in  full,  with  the  addition  of  the 
word  "Limited,1'  if  it  be  in  that  class],  hereby  report,  in  con- 
formity therewith  : 

That  on  the  (5)  at  (6)  in  the  city  of   (7) 

,  we  opened  books  for  subscriptions  to  the  capital 
stock  of  such  company. 

That,  annexed  hereto  is  a  true  copy  of  the  list  of  sub- 
scriptions to  the  said  capital  stock,  which  list  is  marked 
"  EXHIBIT  A,"  and  is  hereby  made  a  part  of  this  record. 

THAT,  at  the  time  of  making  such  subscription,  each  sub- 
scriber paid  to  us  in  cash  ten  per  cent  of  the  par  value  of 
each  and  every  share  subscribed  for  by  him. 

THAT,  on  the  (8)  ,  it  appearing  that  at  least  one- 

half  of  the  capital  stock  of  the  said  (9)  [name  infill],  had  been 


APPENDIX   D.  3/1 

duly  subscribed  in  accordance  with  the  requirements  of 
§  5  of  the  aforesaid  act,  we  called  a  meeting  of  the  sub- 
scribers for  the  purpose  of  adopting  By-laws  for  said  cor- 
poration, and  of  electing  Directors  therefor. 

That  such  meeting  was  called  by  depositing  a  notice  in 
the  post-office,  addressed  to  each  and  every  subscriber  at  his 
last-known  place  of  residence,  and  with  the  proper  postage 
thereon  prepaid,  at  least  five  days  previous  to  the  time 
appointed  for  said  meeting,  as  appears  by  the  copy  of  said 
notice,  and  the  accompanying7  affidavit  hereunto  annexed, 
marked  "  EXHIBIT  B,"  and  which  is  hereby  made  a  part  of 
this  record. 

That  at  the  time  and  place  named  in  said  notice,  to  wit : 
onthe(io)  at(IJ)  in  the  city  of  (12) 

at  (13)  o'clock  in  the  (14)  noon,  subscribers 

to  the  number  of  (15)  and  representing,  in  person  or 

by  proxy,  (16)  of  the  capital  stock,  appeared    and 

organized  by  choosing  Mr.  (17)  Chairman  and  Mr. 

(18)  Secretary. 

That  on  motion,  of   Mr.  (19)  it    was   Resolved, 

"  That  the  following  are  hereby  adopted  as  the  By-laws  of 
this  Corporation  :" 
of  "  The  [state  name  in  full].     [Insert  by-laws  in  the  record] 

That  the  meeting  then  proceeded  to  the  election  of  (20) 
[state  number,  as  required  by  By-lazvs\  Directors  to  manage 
the  affairs  of  the  company  for  the  first  year. 

That   the   Chair   appointed    Mr.    (21)  and    Mr. 

(22)  Inspectors  of  such  election. 

That  upon  a  canvas  by  such  Inspectors,  it  was  found 
that  (23)  votes,   representing  (24)  shares  of 

the  capital  stock,  had  been  cast,  of  which  (25) 

of ,  received votes  ; 


being  a  majority  of  all  the  votes  cast  ;  whereupon  they  were 
declared  duly  elected,  as  appears  by  the  Certificate  of  the 
Inspectors  hereunto  annexed,  marked  "  EXHIBIT  C,"  and 
which  is  hereby  made  part  of  this  record. 

That,  there  being  no  further  business,  the  meeting  then 
adjourned.  ,  Secretary. 


372  THE   LAW   OF   CORPORATIONS. 

And  we,  the  Commissioners  aforesaid,  being  severally 
duly  sworn,  depose  and  say,  and  each  for  himself  deposes 
and  says,, that  the  foregoing  is  a  true  and  correct  record  of 
the  proceedings  had  under  the  aforesaid  License,  and  of  all 
of  them,  from  the  time  of  the  receipt  thereof. 
Severally  subscribed  and  sworn  )  . 

to  before  me,  this day  >  . 

of ,  A.  D.  189— .  )  . 

[L.  S.]  . 

,  Notary  Public. 

"  Exhibit  A,"  referred  to  in  the  foregoing  report: 

List  of  Subscribers 

to  the  capital  stock  of  "  The  {name  in  full."] 


Names. 


Residence. 


No.  of  Shares. 


"  EXHIBIT  B,"  referred  to  in  the  foregoing  report: 
Notice. 

A  meeting  of  the    subscribers  to    the  capital  stock  of 
"  The  (26)  {name  in  full]  will  be  held  at  (27)  in  the 

city  of  (28)  on   (29)  at  (30)  o'clock 

in    the  (31)  noon,  for  the  adoption  of  By-laws  for 

said  corporation,  and  the   election  of  Directors  to  manage 
the  concerns  of  the  company  for  the  first  year. 
Dated . 


Commissioners. 

State  of  New  York,  ) 
(City  and)  County  V  ss: 
of  (32)  ,  ) 

(33)  being  duly  sworn,  deposes  and  says  that  on 

the  (34)  he  deposited  in  the  post-office  in  the  city 


APPENDIX   D.  373 

of  (35)  printed  [or  written]  copies  of  the  above 

notice,  each  notice  having  been  first  securely  enclosed  in  an 
envelope,  and  said  envelopes  having  been  respectively  ad- 
dressed to  each  subscriber  at  his  last  known  place  of  resi- 
dence, and  the  proper  postage  on  each  of  said  envelopes 
having  been  prepaid. 

Sworn  to  before  me  this ) 

day  of  ■ -,  A.  D.  189—.      f 

,  Notary  Public. 

"  Exhibit  C,"  referred  to  in  the  foregoing  report: 

State  of  New  York,      '        ) 
(City  and)  County  of  (36)  ,  )  ss' : 

We  (37)  ,  the  Inspectors  for  the  first  annual  elec- 
tion of  (38)  [name  in  full'],  being  severally  duly  sworn,  do  de- 
pose and  say,  and  each  for  himself  deposes  and  says :  That,  at 
such  election  held  at  (39)  in  the  City  of  (40) 

on  the  (41)  ,  the  following-named  stockholders  were 
elected  Directors  to  manage  the  affairs  of  the  said  company 
for  the  first  year  of  its  existence,  each  Director  having  re- 
ceived the  number  of  votes  set  opposite  to  his  name,  to  wit : 
(42)                 received  (43)  votes ; 

&c. 
Sworn  to  before  me,  this 


day  of ,  A.  D.  189—. 

,  Notary  Public.  — , 

Inspectors. 

V. 
By-Laws. 
By  Laws  of  (0 

Adopted  (2) 

Article  I. 

DIRECTORS. 
SECTION  i.  The  stock,  property  and  concerns  of  the  (3) 
shall,  except  when  otherwise  provided,  be  managed 
and  controlled  by  a  Board  of  Directors  (4)  in  num- 

ber, who  shall  respectively  be  stockholders  in  said  company 
to  the  extent  of  (5)  shares,  and  who  shall  hold  their 


374  THE   LAW   OF   CORPORATIONS. 

offices  for  one  year,  or  until  others  are  elected  in  their  stead. 
Vacancies  in  the  Board  shall  be  filled  only  by  a  vote  of  a 
majority  of  the  Directors  then  existing. 

Sec.  2.  The  annual  election  for  Directors  shall  be  held 
on  the  (6)  [first  Tuesday  of  May  in  each  year],  at  the  prin- 
cipal office  of  the  company. 

SEC.  3.  Regular  meetings  of  the  Board  of  Directors  shall 
be  held  at  the  office  of  the  company  in  the  City  of  (7) 
on  the  (8)   [first   Tuesday  of  each  montJi\.     A  majority  of 
the  whole  number  of  Directors  shall  constitute  a  quorum 
for  the  transaction  of  business. 

Sec.  4.  Special  meetings  of  the  Board  of  Directors  may 
be  called  by  the  President  in  his  discretion,  or  at  the  request 
in  writing  of  two  members  of  the  Board.  Notices  of  such 
meetings  shall  be  given  by  a  written  or  printed  notice  de- 
livered or  mailed  to  each  Director  (9)  days  before 
said  meeting. 

Sec.  5.  The  order  of  business  at  the  regular  meetings  of 
the  Board  of  Directors  shall  be  : 

1.  Calling  the  roll. 

2.  Reading  the  minutes  of  the  last  regular  and  all  inter- 
vening special  meetings. 

3.  Reading  the  minutes  and  report  of  the  Executive 
Committee. 

4.  Communications  and  reports  of  the  President. 

5.  Report    of  the  Treasurer. 

6.  Reports  of  standing  committees. 

7.  Reports  of  special  committees. 

8.  Unfinished  business, 

9.  New  business. 

Article  II. 

STOCKHOLDERS. 
SECTION  i.  Regular  meetings  of  the  stockholders  shall 
be  held  at  the  principal  office  of  the  company  on  the  (10) 
[first  Tuesday  of  May  in  each  year],  for  the  purpose  of 
electing  Directors.  At  such  meetings  two  inspectors  of  elec- 
tion shall  first  be  chosen  by  ballot  to  count  and  certify  the 
votes  for  directors  at  such  meeting. 


APFEXDIX    D.  375 

Sec.  2.  Special  meetings  of  the  stockholders  may  be 
called  by  the  President  in  his  discretion,  and  shall  be  called 
by  him  whenever  requested  so  to  do  by  stockholders  owning 
(n)  [one-third]  of  the  capital  stock. 

SEC.  3.  Stockholders  representing  (12)  [one-third']  of  the 
whole  capital  stock  of  the  company,  present  either  in  person 
or  by  proxy,  shall  be  necessary  to  constitute  a  quorum. 

Article  III. 

1 

OFFICERS. 

SECTION  I.  The  officers  of  the  company  shall  consist  of 
a  President,  Secretary  and  Treasurer,  and  shall  be  annually 
elected  by  [and  from]  the  Board  of  Directors.  [One  person 
may  hold  any  two  of  the  above  offices.]  All  elections  shall 
be  by  ballot,  and  a  majority  shall  be  necessary  for  a  choice. 
Vacancies  among  the  officers  may  be  filled  at  any  meeting 
of  the  Board,  but  no  officer  elected  by  the  Board  shall  be 
removed  except  by  a  vote  of  (12)  [two-thirds]  of  the  Directors. 

Sec.  2.  The  President  shall  have  the  chief  management, 
control  and  supervision  of  the  affairs  of  the  company ;  he 
shall  preside  at  all  meetings  of  the  stockholders  and  of  the 
Directors,  and  shall  [with  the  advice  of  the  Executive  Com- 
mittee] appoint  all  such  subordinate  officers  as  may  be  neces- 
sary for  the  transaction  of  business,  and  remove  the  same  at 
will,  and  fix  their  compensation.  He  shall  sign  all  certifi- 
cates of  stock  of  the  company,  and  all  checks,  drafts,  notes, 
contracts  or  other  obligations  of  the  company. 

Sec.  3.  It  shall  be  the  duty  of  the  Secretary  to  keep  the 
minutes  of  all  meetings  of  the  stockholders  and  of  the 
Directors  [and  such  minutes  of  the  meetings  of  the  Execu- 
tive Committee  as  such  Committee  may  direct] ;  to  keep  the 
books  and  records  of  the  company,  except  the  stock-book, 
and  to  give  notice  to  all  Directors  of  the  time  and  place  of 
all  special  meetings,  and  to  notify  all  stockholders  appearing 
as  such  on  the  books  of  the  company  of  all  regular  and 
special  meetings  of  the  stockholders. 

SEC.  4.  It  shall  be  the  duty  of  the  treasurer  to  receive 
all  moneys  belonging  to  the  company,  and  to  deposit  the 


376  THE   LAW   OF   CORPORATIONS. 

same  with  such  bank  as  may -be  designated  by  the  (13)  [Ex- 
ecutive Committee,  or  Board  of  Directors]  to  the  credit  of  the 
company  in  its  corporate  name  ;  to  keep  true  and  accurate 
vouchers  of  all  money  disbursed  ;  to  keep  regular  books  of 
account,  showing  all  receipts  and  disbursements  of  every 
nature  for  the  company,  and  to  render  an  account  thereof 
when  required  by  the  Board  of  Directors  [or  the  Executive 
Committee].  Before  entering  upon  the  performance  of  his 
duties  he  shall  furnish  such  bonds  for  the  faithful  perform- 
ance of  the  same  as  the  [Executive  Committee  or]  Board  of 
Directors  may  require.  He  shall  have  the  custody  of  the 
seal  of  the  company,  and  he  shall  keep  or  cause  to  be  kept 
a  book  containing  the  names  of  all  persons,  alphabetically 
arranged,  who  are  or  shall  within  six  years  have  been  stock- 
holders of  such  company,  showing  their  places  of  resi- 
dence, the  number  of  shares  of  stock  held  by  them  respec- 
tively, and  the  time  when  they  respectively  became  the 
owners  of  such  shares ;  and  the  amount  of  stock  actually 
paid  in. 

Article  IV. 

EXECUTIVE   COMMITTEE. 
[This  article  may  be  inserted  if  desired.] 

SECTION  i.  There  shall  be  an  Executive  Committee, 
which  shall  consist  of  the  President  and  two  Directors,  to  be 
chosen  by  ballot  by  the  Board  of  Directors.  The  Committee 
may  fix  such  times  for  the  meetings  as  they  may  see  fit,  and 
may  be  called  together  by  the  President  at  any  time  for 
special  business. 

Sec.  2.  All  the  powers  and  duties  of  the  Board  of  Direc- 
tors, except  as  otherwise  expressly  provided  by  such  Board, 
may  be  exercised  and  discharged  by  the  Executive  Com- 
mittee. 

Sec.  3.  The  Executive  Committee  may  fix  and  designate 
such  bonds  to  be  given  by  the  Treasurer,  or  any  other  officer 
or  employee  of  the  company,  conditioned  for  the  faithful 
performance  of  their  duties  and  with  sureties  to  be  approved 
by  such  committee  as  they  may  see  fit. 


APPENDIX   D.  377 

Article  V. 

DIVIDENDS. 
SECTION  i.  Dividends  shall  be  made  from  the  profits  of 
the  company  at  such  times  as  the  Board  of  Directors  may 
determine. 

Article  VI. 

CERTIFICATES   OF   STOCK. 

Section  i.  Each  owner1  of  stock  in  the  company  shall 
be  entitled  to  a  certificate  or  certificates  representing  the 
shares  owned  by  him,  which  certificate  shall  be  signed  by 
the  President  and  Treasurer  and  sealed  with  the  corporate 
seal. 

Sec.  2.  Such  stock  shall  be  transferable  on  the  books  of 
the  company  in  person,  or  by  attorney  duly  authorized,  upon 
the  surrender  of  the  old  certificate. 

Article  VII. 

CONTRACTS  OF  THE  COMPANY. 

SECTION  i.  All  notes,  deeds,  contracts  and  other  evi- 
dences of  debt  or  obligations  to  bind  the  company  shall  be 
signed  by  the  President  and  countersigned  by  the  Secretary. 

SEC.  2.  Checks  and  drafts  of  the  company  shall  be  signed 
by  the  Treasurer  and  countersigned  by  the  President. 

Article  VIII. 

CORPORATE   SEAL. 
SECTION  i.  The  seal  of  this  company  shall  be  circular  in 
form,  with  the  name  of  the  company  and  the  year  of  incor- 
poration thereon,  and  shall  be  in  the  custody  of  the  Treas- 
urer. 

Article  IX. 

BY-LAWS:      HOW   AMENDED. 

SECTION  i.  These  by-laws  may  be  altered  or  amended 

by  a  vote  of  two-thirds  of  the  whole  number  of  Directors  at 

any  regular  meeting  of  the  Board,  or  at  a  special  meeting 

called  for  that  purpose,  provided  notice  of  the  intention  to 


378  THE   LAW    OF   CORPORATIONS. 

make   such   alteration  or  amendment    shall   be   given  at  a 
previous  regular  meeting. 

VI. 
Certificate  of  Payment  of  Capital  Stock. 
We,  (i)  ,  President,  and  (2)  ,  being  a  ma- 

jority of  the  Trustees  of  (3)  ,  do  hereby  certify, 

1.  That  the  capital  stock  of  said  company  is  (4) 
dollars. 

2.  That  the  entire  amount  of  said  capital  has  been  paid 
in.  [If  any  portion  of  the  capital  was  paid  in  in  property  add] 
and    that    (5)  dollars  was  paid    in  in    cash,  and  (6) 

dollars  was  paid  in  in  property  for  the  use  of  said 
company  at  its  fair  and  reasonable  value. 
Dated  (7)  ,  18     . 

State  of  New  York,  )       . 

(City  and)  County  of  (8)  ,) 

(9)  ,  President,  and  (10)  ,  being  duly  sworn, 

severally  depose   and   say,  that   the  said  (11)  is  the 

President  and  (12)  are  Trustees  of  the  (13) 

and  a  majority  thereof,  and  that  the  statements  made   in 
the  foregoing  certificate  are  true. 

Sworn  to  before  me  this ) 

of ,189—.  f 

VII. 

Annual  Report  under  the  Manufacturing  Act. 
We,  (1)  ,  President,  and  (2)  ,  being  a  ma- 

jority of  the  Trustees  of  (3)  ,  do  hereby  certify, 

1.  That  the    capital   stock   of    the    said   company  is  (4) 

dollars. 

2.  That  the  amount  actually  paid  in  is  (5)  dollars 
[if  any  portion  of  the  capital  zv as  paid  in  in  property  add\  of 
which  (6)                  dollars  was  paid  in  in  cash  and  (7) 
dollars  was  paid  in  in  property  for  the  use  of  said  company 
at  its  fair  and  reasonable  value. 

3.  That  the  amount  of  the  existing  debts  of  said  com- 
pany do  not  exceed  (8)  dollars. 

Dated  (9)  ,  18     . 


appendix  d.  •  379 

State  of  New  York,  ) 

(City  and)  County  of  (io)  .  ,  {  ss" 

(ii)  {President  or  Secretary]  being  duly  sworn,  says  that 
(12)  is  the  President  and  (13)  are  the  Trus- 

tees of    the   (14)  company  and  a  majority  thereof, 

and  that  this  deponent  is  (15)  [President  or  Secretary"],  and  the 
foregoing  report  is  true  to  the  best  of  his  knowledge,  infor- 
mation and  belief. 

Sworn  to  before  me,  this ) 

day  of ,  189—.  f 

VIII. 

Annual  Report  under  the  Business  Act. 
We,  (1)  ,  President,  and  (2)  ,  being  a  ma- 

jority of  the  Trustees  of  the  (3)  company,  do  hereby 

certify,  that  on  the  first  day  of  January  last, 

1.  The  capital  stock  of  the  said  company  was  (4) 
dollars. 

2.  That   the  actual  proportion  paid  in  was  (5) 
dollars  [if  any  portion  of  the  capital  zaas  paid  in  in  property 
add],  of  which  (6)  dollars  was  paid  in  in  cash  and  (7) 

dollars  was  paid  in  in  property  for  the  use  of  said 
company  at  its  fair  and  reasonable  value. 

3.  That  the  nature  of  the  then  existing  assets  of  the  cor- 
poration was  (8).     [Specify  nature  of  assets.] 

4.  That  the  names  of  the  stockholders  at  the  said  date 
were  (9) 

5.  That  since  the  last  annual  report  the  following  divi- 
dends have  been  paid  and  declared  (10).    [Specify  dividends^] 

Dated  (11)  ,  18     . 

[Add  affidavit  as  in  form  number  VIP] 

IX. 

Assent  to  Mortgage. 
We,  the  undersigned,  being  (1)  [state  the  necessary  num- 
ber of  stockholders  and  amount  of  stock  to  be  held],  holding 
the  number  of  shares  of  stock  of  said  company  set  opposite 
our  respective  names,  do  hereby  consent  that  said  company 
shall  execute  a  bond  or  bonds  [or  note  or  notes},  conditioned 
for   the    payment  of  the  sum  of  (2)  dollars  and    a 


380  THE    LAW    OF   CORPORATIONS. 

mortgage  to  secure  the  payment  thereof  upon  all  or  any  part 
of  the  real  or  personal  estate  of  said  company,  and  also 
upon  all  or  any  parts  of  the  goods,  chattels,  liberties  and 
franchises  of  saidcompany. 

Dated  (3)  ,  18     . 

Names  of  Stockholders.  Number  of  Shares. 

X. 

Acknowledgment  by  Corporation. 
State  of  New  York,  \  ss 


(City  and)  County  of(i) 

On  the  (2)  day  of  ,  18     ,  before  me  per- 

sonally  appeared    (3)  known  to    me   to  be   the  (4) 

[state    what    officer]    of   the    (5)  described    in    and 

who  executed  the  foregoing  (6)  who  being  by  me 

duly  sworn,  did  depose  and  say,  that  he  resides  in  the 
(7)  ;  that  he  is  the  (8)  [state  office  held] ;  that  he 
knows  the  corporate  seal  of  the  said  (9)  ;  that  the 

seal  affixed  to  the  foregoing  instrument  is  the  corporate  seal 
of  the  said  (10)  and  was  affixed  thereto    by  order 

of  the  Board  of  Directors  of  said  (11)  ;    and  that 

he  signed  his  name  thereto  by  the  like  order  as  (12)  [state 
office  held]  of  the  said  (13)  .     And  deponent  further 

says  that  he  is  acquainted  with  (14)  and  knows  him 

to  be  the  (15)  [state  name  of  other  officer  signing]  and  that 
the  signature  of  said   (16)  above  subscribed  is  the 

genuine  handwriting  of  said  (17)  and  was  thereto 

subscribed  by  the  like  order  of  the  Board  of  Directors  in  the 
presence  of  deponent. 
Subscribed  and  sworn  to,  before  me  this  ) 
day  of ,  18     .  ) 

XI. 

Verification  of  Pleading  or  Petition. 

State  of  New  York,  \ 


(City  and)  County  of  (i) 

(2)  being  duly  sworn  says  that  he  is  (3)  [state 

what  officer]  of  the  (4)  ;  that  he  has  read  the  forego- 


APPENDIX   D.  381 

mg  (5)  anc*  knows  the  contents  thereof  and  that  the 

same  is  true  of  his  own  knowledge,  except  as  to  those 
matters  therein  stated  to  be  alleged  on  information  and 
belief,  and  as  to  those  matters  he  believes  it  to  be  true. 

Deponent  further  says  that  the  reason  that  the  fore- 
going (6)  is  verified  by  deponent  and  not  by  (7) 
[state  party,  as  plaintiff  or  defendant  or  petitioner]  is  that  (7) 
[same]  is  a  corporation  and  deponent  is  (8)  thereof. 
[If  there  are  allegations  on  information  and  belief,  add~\  and 
that  the  sources  of  deponent's  information  and  the  grounds 
of  his  belief  are  (9)  [state  same]. 

Sworn  to,  before  me  this ) 

day  of ,  18     .  ) 

XII. 

Report  to  State  Comptroller  where  dividend  of  six  per  cent  or 
more  has  been  declared. 

Report  of  the  (1)  for  the  year  ending  the  1st  day 

of  November,  A. D.  18     . 

Office  of  the  (i)  [give  post-office  address  of  company']. 

18     . 
To  the  Comptroller  of  the  State  of  New  York: 

Agreeably  to  law,  as  treasurer  of  the  above  company,  I 
make  the  following  report,  viz.  : 

Total  authorized  capital  of  company $ 

Whole  number  of  shares  of  stock  authorized 

Number  of  shares  of  stock  issued 

Par  value  of  each  share % 

Amount  paid  into  the  treasury  of   the  company  on 

each  share S 

Amount  of  capital  paid  in '. $ 

•Amount  of  capital  upon  which  dividends  were  de- 
clared   $ 

Date  of  each  dividend  declared 

Amount  of  each  dividend  declared $ 

Rate  per  cent  per  annum  of  dividends 

Amount  of  profit  added  to  sinking  fund $ 

,  Treasurer. 


382  THE   LAW   OF   CORPORATIONS. 

State  of  New  York,  )  ss  . 

(City  and)  County  of  (2)  ,  f 

On  this  (3)  personally  appeared  before  me,  (4) 

,  treasurer  of  (5)  ,  who   being  duly  sworn 

did  depose  and  say,  that  the  foregoing  report  is  just  and 
true,  according  to  the  accounts  in  the  books  of  the  com- 
pany, and  that  it  includes  all  dividends,  whether  in  cash, 
stock,  scrip,  or  of  any  other  character  or  description,  declared 
by  said  company  during  the  year  ending  on  the  1st  day  of 
November,  A.D.  18  ,  and  that  the  amount  of  profit  added 
to  the  sinking  fund  of  this  company,  during  the  said  year, 
without  a  division  thereof  among  its  stockholders,  was 
$  as  above  stated. 

— ,  Treasurer. 

Sworn  to  and  subscribed  before  me,  ) 

the  day  and  year  aforesaid.  ) 

,  Notary  Public. 

Where  no  dividend  or  a  dividend  of  less  than  six  per  cent  has 
been  declared,  substitute  the  following  for  the  last  affi- 
davit and  acknowledgment. 

State  of  New  York,  \  s$  . 

(City  and)  County  of  (2)  ,  f 

On  this  (3)  ,  before  me,  personally  appeared  (4) 

,  treasurer,  and  (5)  ,  secretary,  of  the  above- 

named  company,  who  being  by  me  severally  duly  sworn, 
did  say  that  the  amount  of  capital  paid  in  of  said  com- 
pany is  (6)  ,  and  that  said  company  declared  no 
dividend  in  cash,  stock,  scrip,  or  of  any  other  character 
or  description  during  the  year  ending  the  1st  day  of 
November,  18  ,  save  the  dividends  herein  reported,  and 
that  they  will  with  fidelity,  according  to  the  best  of  their 
knowledge  and  belief,  estimate  and  appraise  the  capital 
stock  of  said  company  at  its  actual  value  in  cash,  not  less, 
however,  than  the  average  price  which  said  stock  sold  for 
during  said  year,  and  not  less  than  the  price  or  value  as  in- 
dicated or  measured  by  the  amount  of  the  dividends  made 
or  declared  during  the  year;  and  that  the  amount  of  profit 
added  to  the  sinking  fund  of  this  company  during  the  said 


APPENDIX   D.  383 

year  without  a  division  thereof  among  its  stockholders,  was 
(7)  dollars. 

,    Treasurer. 

,   Secretary. 

Sworn  to  and  subscribed  before  me,  ) 
the  day  and  year  aforesaid.  ) 

Notary  Public. 

Office  of  the  (8)  {state  name  and  post-office  address  of 'com- 
pany'] . 

18  . 
We,  the  undersigned,  being  the  treasurer  and  secretary 
of  the  above-named  company,  do  certify,  that  in  pursuance 
of  our  aforesaid  oaths,  we  have  estimated  and  appraised  the 
capital  stock  of  said  company,  at  its  actual  value  in  cash  as 
follows,  viz.  :  (9)  shares   at   (10)  dollars  per 

share,  amounting  in  the  whole  to  (11)  dollars. 

In  witness  whereof,  we  have  hereunto  set  our  hands  the 
day  and  year  aforesaid. 

,  Treasurer. 

,  Secretary. 


XIII. 

Statement  for  Local  Taxation. 

Statement  made  by  the  (1),  {state  full  name  of  compaiiy  or 
corporation]  to  the  assessors  of  the  {2), {state  town  or  ward  of 
city  where  the  principal  office  or  place  of  transacting  the  finan- 
cial concerns  of  said  company  or  corporation  is  located]  for  the 
purposes  of  taxing  the  property  of  said  company  for  the 
year  18  . 
Capital  stock  paid  in  or  secured  to  be  paid  in, 

Rate  of  last  annual  dividend, 

Surplus  earnings  on  hand  exceeding  ten  per  cent  of  the 
capital  stock, 
{If  stock  is  worth  less  than  par  state  actual  value.] 

Nominal  taxable  capital  and  surplus, 

Value  of  other  personal  property. 


384  THE   LAW   OF   CORPORATIONS. 

Deductions  : 

Amount  of  capital  actually  paid  for  real  estate  \_state  lo- 
cation of  real  estate]. 

Amount  of  indebtedness  [except  mortgages  on  real  estate 
and  current  expenses]. 

Mortgages  on  real  estate, 

Amount   invested  in    the  stocks  of   other   corporations 
which  are  taxed  upon  their  capital, 

Amount  invested  in  United  States  securities, 

Amount  of  capital  stock  held  by  New  York  State, 

Amount  of  capital  stock  held  by  any  incorporated  liter- 
ary or  charitable  institution, 

Total  amount  of  taxable  personal  property  and  capital, 

The  principal  place  of  transacting  the  financial  business 
of  this  company  is  at 

[If  assessed  by  the  state  under  Laws  of  1881,  chap.  361,  so 
state]. 

Treasurer. 

State  of  New  York,     ) 
(City  and)  County  of —  ) 

I,  the  treasurer  of  said  corporation,  being  duly  sworn,  do 
hereby  certify  and  declare  that  the  foregoing  statement  is 
in  all  respects  just  and  true. 


APPENDIX     E. 


The  following  laws  of  1890  were  received  too  late  to 
be  incorporated  in  the  text^the  last  chapters  having  been 
passed  after  the  book  had  gone  to  press. 

Chapter  193  is  of  considerable  importance,  as  involving 
the  rights  of  purchasers  of  the  franchises  and  property  of 
manufacturing  corporations. 

Chapter  506,  which  goes  into  effect  July  1st,  is  the  act 
for  the  regulation  and  supervision  of  mortgage  companies, 
which  has  already  attracted  much  attention. 


Chapter  119. 

An  Act  to  amend  chapter  one  hundred  and  forty-three  of 
the  laws  of  eighteen  hundred  and  seventy-four,  entitled 
"An  act  to  authorize  the  formation  of  corporations  for 
the  erection  and  keeping  of  hotels,"  as  amended  by 
chapter  one  hundred  and  twenty-seven  of  the  laws  of 
eighteen  hundred  and  eighty-five,  and  chapter  five  hun- 
dred and  ninety-two  of  the  laws  of  eighteen  hundred 
and  eighty-six. 

SECTION  i.  Section  sixteen  of  chapter  one  hundred  and 
forty-three  of  the  laws  of  eighteen  hundred  and  seventy-four, 
entitled  "  An  act  to  authorize  the  formation  of  corporations 
for  the  erection  and  keeping  of  hotels,"  is  hereby  amended 
so  as  to  read  as  follows : 

§  16.  After  the  passage  of  this  act  it  shall  not  be  lawful 
to  organize  any  corporation  under  chapter  seven  hundred 
and  ninety-one  of  the  laws  of  eighteen  hundred  and  sixty-six, 
or  the  acts  passed  supplementary  thereto  and  amendatory 
thereof. 

§  2.  Said  act,  as  amended  by  chapter  one  hundred  and 
twenty-seven   of  the  laws  of  eighteen  hundred  and  eighty- 

3S5 


386  LAW   OF   CORPORATIONS. 

five,  and  chapter  five  hundred  and  ninety-two  of  the  laws  of 
eighteen  hundred  and  eighty-six,  is  hereby  further  amended 
by  adding  thereto  and  making  a  part  thereof  as  section  nine- 
teen, as  follows : 

§  19.  Any  company  formed  under  this  act  may  secure 
the  payment  of  any  debt  heretofore  contracted,  or  which 
may  be  contracted  by  it,  in  the  business  for  which  it  was  in- 
corporated, by  mortgaging  all  or  any  part  of  the  real  or  per- 
sonal estate  of  such  company ;  and  every  mortgage  so  made 
shall  be  so  valid  to  all  intents  and  purposes  as  if  executed 
by  an  individual  owning  such  real  or  personal  estate ;  pro- 
vided that  the  written  assent  of  the  stockholders  owning  at 
least  two-thirds  of  the  capital  stock  of  such  company  shall 
first  be  filed  in  the  office  of  the  clerk  of  the  county  where 
the  mortgaged  property  is  situated. 

§  3.  This  act  shall  take  effect  immediately. 


Chapter  193. 

An  ACT  supplemental  to  chapter  forty  of  the  laws  of  eigh- 
teen hundred  and  forty-eight,  entitled  "  An  act  to  au- 
thorize the  formation  of  corporations  for  manufactur- 
ing, mining,  mechanical  or  chemical  purposes,"  and  the 
amendments  made  thereto. 

SECTION  i.  When  the  property  and  franchises  of  any 
corporation,  organized  under  the  provisions  of  chapter  forty 
of  the  laws  of  eighteen  hundred  and  forty-eight,  entitled 
"  An  act  to  authorize  the  formation  of  corporations  for 
manufacturing,  mining,  mechanical  or  chemical  purposes," 
and  the  amendments  made  thereto,  shall  be  sold  by  virtue 
of  any  mortgage  or  deed  of  trust  duly  executed  by  it,  or 
pursuant  to  the  judgment  or  decree  of  a  court  of  competent 
jurisdiction,  or  by  virtue  of  an  execution  issued  thereon,  or 
under  any  sale  made  by  a  receiver  appointed  in  proceedings 
for  the  dissolution  of  such  corporation,  the  creditors  of  such 
corporation,  or  such  of  them  as  desire,  or  any  person,  per- 
sons, or  committee  designated  by  them,  may  purchase  at 
such  sale  such  franchises  and  such  property,  or  any  part 
thereof,  and   upon   such  purchase  shall  acquire  title  to  the 


APPENDIX    E.  387 

same  in  the  manner  prescribed  by  law.  He  or  they  may  as- 
sociate with  them  any  number  of  persons,  not  less  than  the 
numbers  required  by  law,  for  the  incorporation  of  such  cor- 
poration, a  majority  of  whom  shall  be  citizens  and  residents 
of  this  state,  and  they  may  become  a  corporation  and  take 
and  possess  the  property  and  franchises  thus  sold,  and  which 
were  at  the  time  of  sale  possessed  by  the  corporation  whose 
property  shall  have  been  so  sold  upon  making,  acknowledg- 
ing and  filing,  in  the  office  where  certificates  of  such  corpora- 
tions are  required  by  law  to  be  filed,  a  certificate  in  which 
they  shall  describe  by  name  and  reference  to  the  law  under 
which  it  was  organized,  the  corporation  whose  property  and 
franchises  they  have  acquired,  and  the  court,  by  whose  au- 
thority the  sale  had  been  made,  with  the  date  of  the  judg- 
ment or  decree  authorizing  or  directing  the  same,  and  if  the 
sale  was  made  by  a  receiver,  the  date  of  the  order  appoint- 
ing the  receiver,  and  a  brief  description  of  the  property  sold, 
and  also  the  following  particulars  : 

1.  The  name  of  the  new  corporation  intended  to  be  formed 
by  the  filing  of  such  certificate. 

2.  The  maximum  amount  of  its  capital  stock,  and  the 
number  of  shares  into  which  it  is  to  be  divided,  specifying 
the  classes  thereof,  whether  common  or  preferred,  and  the 
amount  of  and  rights  pertaining  to  each  class. 

3.  The  number  of  trustees,  not  less  than  three  nor  more 
than  thirteen,  with  their  names  and  post-office  address,  who 
shall  manage  the  affairs  of  the  new  corporation  for  the  first 
year. 

4.  Any  plan  or  agreement  which  may  have  been  entered 
into,  at  or  previous  to  the  time  of  sale,  by  the  purchasers  or 
by  them  and  their  associates,  in  anticipation  of  the  forma- 
tion of  the  new  corporation,  and  pursuant  to  which  such 
purchase  was  made. 

Such  corporation  shall  be  vested  with  and  be  entitled  to 
exercise  and  enjoy  all  the  rights,  privileges  and  franchises 
which  at  the  time  of  such  sale  belonged  to  or  were  vested  in 
the  corporation  last  owning  the  property  sold  or  its  receiver, 
and  shall  be  subject  to  all  the  provisions,  duties  and  liabili- 
ties imposed  by  law  on  such  corporations. 


388  LAW    OF   CORPORATIONS. 

§  2.  At  or  previously  to  the  sale  the  purchasers  thereof 
or  the  persons  for  whom  the  purchase  is  to  be  made  may 
enter  into  a  plan  or  agreement  for  or  in  anticipation  of  the 
readjustment  of  the  respective  interests  therein  of  the 
creditors  uniting  in  such  plan  of  the  corporation  owning  such 
property  and  franchises  at  the  time  of  sale,  and  the  respec- 
tive rights  of  the  associates  of  such  creditors  uniting  in  such 
plan,  if  any,  and  for  the  representation  of  such  creditors  and 
associates,  if  any,  in  the  stock  of  the  new  corporation  to  be 
formed,  and  also  in  the  bonds  of  the  new  corporation,  if  any 
bonds  are  to  be  issued.  And  may  therein  regulate  the  vot- 
ing by  the  holders  of  the  preferred  and  common  stock  at  any 
and  all  stockholders'  meetings,  and  by  the  holders  of  any 
or  all  of  the  bonds  of  the  corporation  foreclosed,  or  of  the 
bonds  issued  or  to  be  issued  by  the  new  corporation,  and 
such  right  of  voting  by  bondholders  shall  be  exercised  in 
such  manner,  for  such  period  and  upon  such  conditions  as 
shall  be  therein  described.  Such  plan  or  agreement  must 
contain  suitable  provision  for  the  bondholders  voting  by 
proxy,  if  they  are  allowed  to  vote,  and  must  not  be  incon- 
sistent with  the  laws  of  the  state,  and  shall  be  binding  upon 
the  corporation  until  changed  as  therein  provided  or  as  other- 
wise provided  by  law.  If  bonds  of  the  new  corporation  are 
issued  as  provided  for  by  the  said  plan  or  agreement,  they 
may  be  secured  by  a  mortgage  or  trust  deed  upon  the  prop- 
erty of  the  new  corporation,  its  franchises,  rights  and  privi- 
leges. The  new  corporation,  when  duly  organized,  pursuant 
to  such  plan  or  agreement  and  the  provisions  of  law,  may 
issue  its  bonds  and  stock  in  conformity  with  the  provisions 
of  such  plan  or  agreement,  and  may  at  any  time  within  six 
months  after  its  organization  pay,  compromise  or  discharge 
any  debt,  claim  or  liability  of  the  former  corporation  to  the 
creditors  of  the  former  corporation  who  unite  in  the  plan  or 
agreement  to  form  said  new  corporation  as  provided  in  and 
by  said  plan.  And  may  establish  preferences  in  respect  to 
the  payment  of  dividends  in  favor  of  any  portion  of  its 
capital  stock,  and  may  divide  its  stock  into  classes,  but  the 
capital  stock  of  the  new  corporation  shall  not  exceed  in  the 
aggregate  the  maximum  amount  of  stock  mentioned  in  the 


APPENDIX    E.  389 

certificate  of  incorporation,  nor  shall  the  bonds  issued  by  it 
exceed  in  the  aggregate  two-thirds  of  the  value  of  the  cor- 
porate property. 

§  3.  The  supreme  court  may  direct  a  sale  of  the  whole 
of  the  property,  or  such  part  of  it  as  it  may  think  proper, 
together  with  the  rights,  privileges  and  franchises  of  the 
corporation  when  the  sale  is  made  by  a  receiver,  and  if 
the  whole  of  the  property  is  not  so  sold,  together  with  the 
rights,  privileges  and  franchises  of  the  corporation,  the  bal- 
ance of  the  property  shall  be  sold  separately.  If  the  sale  is 
made  under  the  power  contained  in  a  mortgage  or  mortgages 
or  deed  of  trust,  the  judgment  or  order  may  in  like  manner 
direct  the  sale  to  be  made  either  in  case  of  the  non-payment 
of  interest  only,  or  of  both  the  principal  and  the  interest  due 
and  to  be  paid  and  secured  by  any  such  mortgage  or  mort- 
gages or  deeds  of  trust. 

§  4.  This  act  shall  take  effect  immediately. 


Chapter  292. 

An  Act  to  amend  section  eight  of  chapter  two  hundred 
and  forty-eight  of  the  laws  of  eighteen  hundred  and 
seventy-two,  entitled  "An  act  to  authorize  the  forma- 
tion, establishing  and  maintaining  of  driving-park,  park 
and  agricultural  associations." 

Section  i.  Section  eight  of  chapter  two  hundred  and 
forty-eight  of  the  laws  of  eighteen  hundred  and  seventy-two, 
entitled  "  An  act  to  authorize  the  formation  and  establish- 
ing and  maintaining  of  driving  park,  park  and  agricultural 
associations"  is  hereby  amended  to  read  as  follows  : 

§  8.  The  officers  of  any  association  organized  under  the 
provisions  of  this  act  shall  be  jointly  and  severally  liable, 
for  all  debts  due  from  said  association,  contracted  while  they 
are  officers  thereof,  and  prior  to  the  filing  of  a  certificate 
showing  that  the  whole  amount  of  capital  stock  has  been 
paid  in  as  required  by  section  three  of  this  act,  provided  a 
suit  for  the  collection  of  the  same  be  brought  within  one 
year  after  the  debt  shall  become  due  and  payable. 


390  LAW    OF    CORPORATIONS. 

§2.   Nothing  in  this  act  contained  shall  affect  any  claim 
or  liability  which  now  exists. 

§  3.  This  act  shall  take  effect  immediately. 


Chapter  400. 

An  Act  in  relation  to  life  and  casualty  insurance  companies, 
associations  and  societies  organized  under  the  laws  of 
this  state. 

SECTION  i.  No  order,  judgment  or  decree,  providing 
for  an  accounting  or  enjoining,  restraining  or  interfering  with 
the  prosecution  of  the  business  of  any  life  or  casualty  insur- 
ance company,  association  or  society  of  this  state  or  appoint- 
ing a  temporary  or  permanent  receiver  thereof,  shall  be  made 
or  granted  otherwise  than  upon  the  application  of  the 
attorney-general  on  his  own  motion  or  after  his  approval  of 
a  request  in  writing  of  the  Superintendent  of  the  Insurance 
Department  except  in  an  action  by  a  judgment  creditor  or  in 
proceedings  supplementary  to  execution. 

§  2.  This  act  shall  take  effect  immediately. 


Chapter  439. 

An  Act  to  amend  chapter  five  hundred  and  forty-six  of  the 
laws  of  eighteen  hundred  and  eighty-seven,  entitled 
"An  act  to  provide  for  the  organization  of  trust  com- 
panies, for  their  supervision,  and  for  the  administration 
of  their  affairs." 

SECTION  i.  Section  twenty-seven  of  chapter  five  hun- 
dred and  forty-six  of  the  laws  of  eighteen  hundred  and 
eighty-seven,  entitled  "  An  act  to  provide  for  the  organiza- 
tion of  trust  companies,  for  their  supervision,  and  for  the 
administration  of  their  affairs,"  is  hereby  amended  so  as  to 
read  as  follows : 

§  27.  The  trustees  shall  have  a  discretionary  power  of 
investing  the  moneys  received  by  them  in  trust,  in  public 
stocks  of  the  United  States,  or  of  any  individual  state,  or  in 
the  bonds  or  stocks  of  any  incorporated  city  or  county  of 
this  state,  duly  authorized  to  be  issued,  or  in  such  real  and 


APPENDIX    E.  391 

personal  securities  as  they  may  deem  proper;  but  no  trust 
company  shall  invest  in  the  stock  of  any  private  incorporated 
company  to  an  amount  in  excess  of  ten  per  cent  of  the 
capital  of  the  trust  company. 

§  2.  Section  thirty-one  of  said  chapter  five  hundred 
and  forty-six  of  the  laws  of  eighteen  hundred  and  eighty- 
seven  is  hereby  made  applicable  to  any  trust  company  char- 
tered and  existing  before  June  eighth,  eight  hundred  and 
eighty-seven,  by  special  acts  of  the  legislature. 

§  3.  All  acts  or  parts  of  acts  inconsistent  with  the  pro- 
visions of  this  act  are  hereby  repealed. 

§  4.  This  act  shall  take  effect  immediately. 


Chapter   506. 

An  Act  relating  to  the  supervision  of  mortgage  companies 
organized  under  the  laws  of  another  state. 

Section  i.  The  Superintendent  of  the  Banking  Depart- 
ment is  hereby  empowered  and  directed  to  issue  a  license 
under  his  hand  and  seal,  in  accordance  with  the  conditions 
hereinafter  mentioned,  authorizing  mortgage  companies 
organized  under  the  laws  of  another  state  to  transact  busi- 
ness within  the  limits  of  this  state.  The  supervisory  power 
granted  under  this  act  shall  apply  to  associations,  copartner- 
ships, individuals,  joint-stock  companies,  firms,  or  corpora- 
tions organized  under  the  laws  of  any  other  state,  and  known 
as  mortgage,  loan,  investment  or  trust  companies,  who  sell, 
offer  for  sale,  or  negotiate  bonds  or  notes  secured  by  deed 
or  trust  or  mortgage  of  real  estate,  or  choses  in  action, 
owned,  issued,  negotiated  or  guaranteed  by  it  or  them. 

v?  2.  The  companies,  associations  and  others  described  in 
section  one  of  this  act,  shall  make  and  furnish  to  the  Super- 
intendent of  the  Banking  Department  a  true  and  verified 
statement  of  their  financial  condition  in  detail  on  blanks  fur- 
nished by  the  superintendent  for  that  purpose,  which  state- 
ment shall  show,  first,  the  amount  of  capital  actually  paid  in, 
in  cash-  second,  the  amount  of  capital  subscribed;  third, 
the  undivided  profits  or  earnings  on  hand  ,  fourth,  the  total 
liabilities  itemized  in  such  form  as  may  be  indicated  in  the 


392  LAW   OF  CORPORATIONS. 

blanks ;  fifth,  the  total  amount  of  moneys  loaned,  invested 
or  guaranteed ;  sixth,  the  number  and  amount  of  all  mort- 
gages in  arrears  of  interest  for  a  period  exceeding  six  months 
prior  to  the  date  of  said  report  ;  seventh,  the  number  and 
amount  of  mortgages  foreclosed  during  the  past  year ;  and 
eighth,  the  present  cash  value  of  all  the  real  estate  held  or 
owned  by  foreclosure  or  otherwise,  and  such  other  and  fur- 
ther information  concerning  their  business  affairs  and  meth- 
ods as  the  superintendent  shall  require.  The  said  state- 
ment shall  be  signed  by  such  officers  and  others,  and  in  such 
form  as  the  superintendent  may  prescribe.  The  first  state- 
ment under  this  act  shall  be  made  on  the  first  day  of  July, 
eighteen  hundred  and  ninety,  and  succeeding  statements 
shall  be  made  semi-annually  on  the  first  day  of  January  and 
July  respectively.  The  superintendent  may,  if  he  be  of 
opinion  that  it  is  desirable,  require  that  a  like  report  from 
any  company  either  wholly  or  in  part,  as  to  the  particulars 
aforesaid,  be  made  to  him  at  any  time,  and  submitted  within 
such  period  as  he  may  designate.  Before  the  issuance  of  a 
license  to  transact  business,  it  shall  be  the  further  duty  of 
the  superintendent,  either  personally  or  by  some  competent 
person  or  persons  appointed  by  him,  to  visit  and  examine 
thoroughly  into  the  condition,  business  methods  and  affairs 
generally  of  any  company,  association,  corporation,  copart- 
nership, or  individual  proposed  to  be  licensed  by  him  ;  and 
the  said  superintendent  is  hereby  empowered  to  make  such 
examination  as  often  thereafter  as  he  deems  necessary,  but 
such  examination  shall  be  made  at  least  once  in  every  year. 
The  superintendent  and  every  such  examiner  shall  have 
power  to  administer  an  oath  to  any  person  whose  testimony 
may  be  required  in  any  such  examination,  and  to  compel  the 
appearance  and  attendance  of  any  such  person  for  the  pur- 
pose of  such  examination  by  summons,  subpoena,  or  attach- 
ment in  the  manner  now  authorized  in  respect  to  the  attend- 
ance of  persons  a  switnesses  in  the  courts  of  record  of  this 
state  ,  and  all  books  and  papers  which  it  may  be  deemed  nec- 
essary to  examine  by  the  superintendent  or  the  examiner  or 
examiners  so  appointed  shall  be  produced  and  their  produc- 
tion   may   be   compelled   in  like  manner.     The  expense  of 


APPENDIX    E. 


393 


every  such  examination  shall  be  paid  by  the  corporation, 
company,  firm  or  association  examined  to  such  an  amount 
as  the  superintendent  shall  determine.  Whenever  such  ex- 
amination shall  be  made  by  the  superintendent  personally, 
or  by  one  or  more  of  the  regular  clerks  in  his  department, 
no  charge  shall  be  made  in  such  examination  but  for  the 
necessary  travelling  and  other  actual  expenses.  On  every 
such  examination  inquiry  shall  be  made  as  to  the  condition 
and  resources  of  the  company  generally,  the  mode  of  con- 
ducting and  managing  its  affairs,  the  advice  of  its  directors 
or  trustees,  the  investment  of  its  'funds,  the  safety  and 
prudence  of  its  management,  the  security  afforded  to  those 
by  whom  its  engagements  are  held,  and  within  the  require- 
ments of  its  charter  and  of  law  have  been  complied  with  in 
the  administration  of  its  affairs. 

§  3.  Whenever  it  shall  appear  to  the  Superintendent  of 
the  Banking  Department  from  an  examination  made  and  the 
statement  or  report  submitted  by  any  such  company,  corpo- 
ration, copartnership,  firm  or  association,  pursuant  to  the 
requirements  of  section  two  of  this  act,  that  it  is  conducting 
its  affairs  in  a  safe  and  authorized  manner,  he  shall  issue  to 
said  company,  corporation,  copartnership,  firm  or  associa- 
tion a  certificate,  under  his  hand  and  seal,  permitting  it  to 
transact  business  in  this  state  for  the  term  of  one  year  from 
the  date  thereof. 

§  4.  No  person,  association,  corporation,  company  or  part- 
nership shall,  after  the  first  day  of  October,  eighteen  hun- 
dred and  ninety,  act  in  this  state  as  the  agent  or  represen- 
tative of  any  company,  corporation  or  others  described  in 
section  one  of  this  act  unless  the  same  be  duly  licensed  by 
the  Superintendent  of  the  Banking  Department,  as  hereinbe- 
fore provided.  Every  such  company,  corporation  or  others 
described  in  section  one  of  this  act,  shall,  within  thirty  days 
after  being  authorized  to  transact  business  in  this  state,  file 
in  the  office  of  the  Superintendent  of  the  Banking  Depart- 
ment a  certificate  stating  the  name  and  business  address  of 
every  person,  association,  corporation,  company,  firm  or 
others  who  act  or  propose  to  act  in  this  state  as  the  agent 
or  representative  of  such  company,  and  in  case  of  an)'  change 


394  LAW    OF   CORPORATIONS. 

in  such  representation,  an  amended  certificate  shall  forth- 
with be  filed  as  herein  provided.  Whoever  shall  offend 
against  the  provisions  of  this  section  shall  be  guilty  of  a 
misdemeanor,  and  shall  also  forfeit  the  sum  of  one  thousand 
dollars.  The  penalties  prescribed  herein  shall  be  recovered 
by  suit  in  the  name  of  the  people  of  this  state,  to  be  prose- 
cuted by  the  attorney-general. 

§  5.  Licensees  under  the  provisions  of  this  act  shall  pay 
their  proportionate  share  of  the  expenses  of  the  Banking 
Department  as  is  now  required  of  banks  and  other  corpora- 
tions supervised  by  the  Superintendent  of  the  Banking  De- 
partment by  section  six  of  chapter  four  hundred  and  nine 
of  the  laws  of  eighteen  hundred  and  eighty-two,  and  for 
such  purposes  said  licensees  shall  be  subject  to  the  provisions 
of  said  section. 

§  6.  Licensees  under  the  provisions  of  this  act  shall  be 
granted  a  limit  of  twenty  days  after  January  first  and  July 
first  respectively,  in  which  to  file  the  semi-annual  statements 
in  the  orifice  of  the  Superintendent  of  the  Banking  Depart- 
ment, and  upon  failure  to  so  report  within  the  specified 
time  or  to  otherwise  comply  with  the  requirements  of  this 
act  the  superintendent  shall  revoke  the  said  license  as  pro- 
vided in  section  seven  of  this  act. 

§  7.  Whenever  it  shall  appear  to  the  said  superintendent 
from  an  examination  made  or  report  submitted  by  such  li- 
censee under  this  act,  or  from  sufficient  information  other- 
wise obtained  that  such  licensee  is  conducting  its  business 
and  affairs  in  an  unsafe  or  unauthorized  manner,  he  shall  by 
an  order  under  his  hand  and  seal  of  office  addressed  to  such 
licensee  direct  said  licensee  to  discontinue  such  unsafe  or 
illegal  practices,  and  to  conform  to  the  requirements  of  its 
charter  and  of  law,  and  to  provide  for  the  safety  and  secur- 
ity of  its  transactions.  If  such  licensee  shall  neglect  or  re- 
fuse to  make  any  report  as  hereinbefore  specified,  or  to  com- 
ply with  such  order  as  aforesaid  ;  or  whenever  it  shall  appear 
to  the  superintendent  that  it  is  unsafe  or  inexpedient  for  any 
such  licensee  to  continue  the  transaction  of  business,  he 
shall  forthwith  revoke  the  license  of  such  company  and  serve 
a  copy  of   the   order   of  revocation   on  said  company  at  its 


APPENDIX    E.  395 

head  office ;  a  copy  of  said  order  shall  also  be  served  upon 
each  agent  or  representative  of  said  company  named  as  pre- 
scribed by  section  four  of  this  act,  by  depositing  the  same 
in  the  post-office  directed  to  each  of  said  agents  at  his  place 
of  business.  The  superintendent  may  also  in  his  discretion 
publish  such  order  with  such  other  facts  as  he  may  deem 
proper  for  six  successive  days  in  the  state  paper  published 
in  the  city  of  Albany. 

|  8.  It  shall  be  the  duty  of  the  Superintendent  of  the 
Banking  Department,  on  or  before  the  first  day  of  March  in 
each  year,  to  communicate  to  the  legislature  a  statement  of 
the  condition  of  every  company  and  others,  described  in 
section  one,  authorized  to  transact  business  in  this  state,  or 
from  which  a  report  has  been  received  for  the  preceding 
year,  giving,  in  detail,  the  actual  financial  condition  of  every 
such  company,  together  with  such  other  facts  as  may,  in  his 
judgment,  be  right  and  proper  to  communicate  for  the  pub- 
lic benefit.  It  shall  be  the  duty  of  the  superintendent  to 
print  the  said  report,  as  a  separate  document,  the  cost  of 
same  to  be  defrayed  in  like  manner  as  other  expenses  in- 
curred in  and  about  the  conducting  of  the  business  of  the 
said  department. 

§  9.  Every  corporation,  company,  firm  or  association,  de- 
scribed in  section  one  of  this  act,  shall,  before  being  author- 
ized to  transact  business  within  this  state,  by  an  instrument 
in  writing,  duly  executed,  appoint  the  Superintendent  of  the 
Banking  Department  of  this  state  the  true  and  lawful  attor- 
ney of  such  corporation,  company,  or  association,  upon 
whom  all  lawful  process  in  any  action  or  proceeding  by  any 
resident  of  this  state  against  such  corporation,  company  or 
association  may  be  served,  with  the  same  effect  as  if  such 
corporation,  company  or  association  existed  in  this  state, 
and  had  been  lawfully  served  with  process  therein.  A  cer- 
tificate of  such  appointment,  duly  certified  and  authenti- 
cated, shall  be  filed  in  the  office  of  the  Superintendent  of  the 
Banking  Department,  and  copies  certified  by  him  or  his  dep- 
uty shall  be  deemed  sufficient  evidence  in  regard  thereto. 
Service  in  favor  of  a  resident  of  this  state  upon  such  attor- 
ney shall  thereafter  be  deemed  a  personal  service  upon  such 


396  LAW    OF   CORPORATIONS. 

corporation,  company  or  association.  Whenever  lawful 
process  against  such  corporation,  company  or  association 
shall  be  served  upon  the  superintendent  of  the  Banking  De- 
partment, under  the  provisions  of  this  act,  he  shall  forth- 
with forward  a  copy  of  the  process  served  on  him,  by  mail, 
prepaid,  and  directed  to  the  president  or  secretary  of  the 
corporation,  company  or  association  at  the  last-named  post- 
office  address  of  such  corporation,  company  or  association. 
For  each  copy  of  process  the  superintendent  shall  collect 
the  sum  of  two  dollars,  which  shall  be  paid  by  the  plaintiff 
or  moving  party  at  the  time  of  such  service,  the  same  to  be 
recovered  by  him  as  part  of  his  taxable  disbursements,  if  he 
succeeds  in  his  suit  or  proceeding.  The  term  "  process"  in 
this  act  includes  any  writ,  summons,  petition,  or  order, 
whereby  any  suit,  action,  or  proceeding  shall  be  commenced 
by  a  resident  of  this  state. 

§  10.  The  supervisory  powers  granted  under  this  act 
shall  also  apply  to  associations,  copartnerships,  joint-stock 
companies  or  corporations  organized  under  the  laws  of  this 
state,  who  sell,  or  offer  for  sale,  or  negotiate  bonds  or  notes 
secured  by  deed  of  trust  or  mortgage  of  real  estate,  situate 
outside  of  this  state,  owned,  issued,  negotiated  or  guaranteed 
by  it  or  them. 

§  11.  The  provisions  of  this  act  shall  not  apply  to  trust, 
loan,  mortgage,  security,  guarantee  or  indemnity  companies 
or  associations,  organized  under  the  laws  of  another  state, 
which  now  do  or  hereafter  may  make  the  deposit  of  securi- 
ties with  the  Superintendent  of  the  Banking  Department 
required  by  section  two  hundred  and  twenty-four  of  chapter 
four  hundred  and  nine  of  the  laws  of  eighteen  hundred  and 
eighty-two. 

§  12.  The  sum  of  three  thousand  dollars,  or  so  much 
thereof  as  may  be  necessary  is  hereby  appropriated  out  of 
any  moneys  in  the  treasury  not  otherwise  appropriated  to 
defray  the  expenses  of  carrying  out  the  provisions  of  this 
act,  to  be  paid  from  the  treasury  on  the  order  of  the  Super- 
intendent of  the  Banking  Department,  said  sum  to  be  re- 
funded  to  the  treasury  by  the  licensees  under  this  act  on 


APPENDIX   E.  397 

assessment  made  by  the  said  superintendent  as  provided  by 
section  five  of  this  act. 

§  13.  This  act  shall  take  effect  July  first,  eighteen  hun- 
dred and  ninety. 


Chapter  508. 

An  Act  to  amend  chapter  forty  of  the  Laws  of  eighteen 
hundred  and  forty-eight,  entitled,  as  amended  by  chap- 
ter eight  hundred  and  thirty-eight  of  the  Laws  of  eigh- 
teen hundred  and  sixty-six,  "An  act  to  authorize  the 
formation  of  corporations  for  manufacturing,  mining, 
mechanical,  chemical,  agricultural,  horticultural,  medi- 
cal or  curative,  mercantile  or  commercial  purposes." 

Section  i.  Section  one  of  chapter  forty  of  the  Laws  of 
eighteen  hundred  and  forty-eight,  entitled,  as  amended  by 
chapter  eight  hundred  and  thirty-eight  of  the  Laws  of  eigh- 
teen hundred  and  sixty-six,  "An  act  to  authorize  the  for- 
mation of  corporations  for  manufacturing,  mining,  mechani- 
cal, chemical,  agricultural,  horticultural,  medical  or  curative, 
mercantile  or  commercial  purposes,"  is  hereby  amended  so 
as  to  read  as  follows  : 

Sec.  1.  At  any  time  hereafter,  any  three  or  more  persons 
who  may  desire  to  form  a  company  for  the  purpose  of  carry- 
ing on  any  manufacturing,  mining,  mechanical,  or  chemical 
business,  or  the  business  of  printing,  publishing  or  selling 
books,  pamphlets  or  newspapers,  or  advertising  the  same  or 
other  articles,  or  for  the  purpose  of  purchasing,  taking,  hold- 
ing and  possessing  real  estate  and  buildings,  and  selling, 
leasing  and  improving  the  same,  or  the  business  of  making 
butter,  cheese,  concentrated  or  condensed  milk,  or  any  other 
products  of  the  dairy,  or  the  business  of  erecting  buildings 
for  church  sheds  or  laundry  purposes,  and  the  carrying  on  of 
laundry  business  or  the  business  of  slaughtering  animals,  or 
for  the  purpose  of  towing  or  propelling  canal-boats,  vessels, 
rafts  or  floats  on  the  canals  and  navigable  rivers  of  the  State 
of  New  York,  by  animal  or  steam  power,  or  for  the  purpose  of 
buying,  storing,  selling  or  shipping  coal,  merchandise  and  farm 
produce,  their  operations  not  to  be  confined  to  the  country* 

*  So  in  the  original. 


39S  LAW    OF   CORPORATIONS. 

in  which  their  certificates  shall  be  filed,  or  the  supplying  of 
hot  water  or  hot  air  or  steam  for  motive  power,  heating, 
cooking  or  other  useful  applications  in  the  streets  and  public 
and  private  buildings  of  any  city,  village  or  town  in  this 
state,  or  the  business  of  buying,  breeding,  grazing,  pasturing, 
dealing  in  and  selling  cattle,  sheep,  hogs,  horses  and  other 
live-stock  in  the  United  States  of  America,  British  North 
America  and  elsewhere,  may  make,  sign  and  acknowledge, 
before  some  ofificer  competent  to  take  the  acknowledgment 
of  deeds,  and  file  in  the  office  of  the  clerk  of  the  county  in 
which  the  business  of  the  company  shall  be  carried  on,  and 
a  duplicate  thereof  in  the  office  of  the  secretary  of  state,  a 
certificate,  in  writing,  in  which  shall  be  stated  the  corporate 
name  of  said  company,  and  the  objects  for  which  the  com- 
pany shall  be  formed,  the  amount  of  the  capital  stock  of 
said  company,  the  time  of  its  existence  (not  to  exceed  fifty 
years),  the  number  of  shares  of  which  the  said  stock  shall 
consist,  the  number  of  trustees  and  their  names  who  shall 
manage  the  concerns  of  said  company  for  the  first  year,  and 
the  name  of  the  town  and  county  in  which  the  operations  of 
said  company  are  to  be  carried  on.  No  company  organized 
under  this  act  for  the  purpose  of  taking,  purchasing,  hold- 
ing or  possessing  real  estate  and  buildings,  and  selling,  leas- 
ing and  improving  the  same,  shall  be  permitted  to  purchase 
and  hold  real  estate  to  the  value  of  more  than  one  million 
dollars,  provided,  however,  that  any  company  so  organised  for 
the  purpose  of  erecting,  owning  and  maintaining  a  building  in 
any  city  to  be  used  or  rented  as  an  office  or  store  building  may 
hold  real  estate  in  excess  of  the  value  of  one  million  dollars  ; 
but  this  act  shall  not  be  deemed  to  repeal  or  affect  in  any 
way  any  act  heretofore  passed  and  amendatory  of  or  supple- 
mentary to  the  said  act  of  February  seventeenth,  eighteen 
hundred  and  forty-eight,  except  as  herein  provided. 
SEC.  2.  This  act  shall  take  effect  immediately. 


INDEX 


PAGE 

Actions  and  Defences.     See  Legal  Actions  and  Proceedings. 

Action  for  Sequestration  of  Property 291 

See  Dissolution. 

Action  to  Annul  a  Corporation 295 

See  Legal  Actions  and  Proceedings;  Dissolution. 
Agricultural  Associations.      See  Driving  Park  and  Agricultural  Asso- 
ciations. 

Agricultural  Purposes:     Organization  of  Companies'for 4 

Amending  Certificate  of  Organization   44 

Does  not  affect  pending  suits 44 

Certificate  may  be  amended  or  corrected 44 

Cannot  make  material  change  by  [Note  3] 44 

Amount  of  Capital  Stock.     May  be -increased  or  diminished 105 

See  Capital  Stock. 

Annul:     Action  to 295 

Answer.     See  Legal  Actions  and  Proceedings. 

Assignment  of  Property:     When  corporations  cannot  make 153 

When  moneyed  corporations  cannot  make 154 

Whether  the  statute  applies  to  banks  [Note  2] 1  -  5 

Prohibited  after  petition  for  dissolution 287 

Attachment:     When  granted  against  domestic -corporation 250 

When  granted  against  foreign  corporations 250 

Interest  of  a  stockholder  may  be  attached 251 

May  be  levied  upon  cause  of  action,  etc 251 

How  to  be  levied 251 

May    be    levied    upon     property   of    foreign    corporation    though 

receiver  has  been  appointed  in  another  state.  .  .    251 

Not  on  un-issued  bonds  of   foreign  corporation  in  hands  of   its 

agent  in  this  state   252 

Nor  upon  shares  owned   by  non-resident   in  stock  of  a  foreign 

corporation 252 

Nor  upon  property  of  national  banks 252 

Banking  Powers:     Corporations  not    incorporated    for  banking  pur- 
poses shall  not  possess 152 

Penalty    for    membership     in     association     wrongfully    assuming 

[Note  6] 152 

Corporations  wrongfully  assuming,  notes  given  by,  void 152 

Whe'n  corporation  having,  may  be  dissolved 2S8 

399 


400  INDEX. 

PAGE 

Banks:     How  organized 21 

Amount  of  capital 21 

Shares  of  stock  personal  property 128 

Certificate,  what  must  set  forth 21 

Powers  of 22 

When  to  commence  business 23 

Consolidation  of 72 

Agreement  to  be  made 72 

Assent  of  stockholders  necessary 73 

Agreement  to  be  submitted   to  Superintendent  of  Banking  De- 
partment    73 

He  will  fix  the  amount  of  capital  stock 73 

Dissenting  stockholders  must  be  paid  for  stock 74 

May  change  place  of  business 92 

Must  apply  to  the  court 92 

Notice  of  application  to  be  published ' 92 

Must  be  by  petition 92 

Court  may  authorize  change 93 

May  change  name 95 

Must  apply  to  the  court 95 

Application  to  be  approved  by  the  Superintendent  of  the  Bank- 
ing Department 95 

When  court  will  make  order 95 

May  reduce  amount  of  capital  stock 114 

Must  make  quarterly  reports. I41 

Contents  of  such  reports I41 

Must  be  published M1 

Penalty  for  failure  to  make  such  report 141 

Annual  report  to  be  published 142 

Contents  of  such  report 142 

List  of  stockholders  to  be  kept I51 

Must  be  filed  in  county  clerk's  office I51 

Whether  included  in  certain   restrictions  upon   moneyed  corpora- 
tions [Note  2] r55- 

No  personal  liability  of  stockholders 210 

Tax  on  franchises 279 

Boilers  :     Companies  to  insure.    J5 

Books,  Right  to  Examine.     See  Rights  of  Stockholders. 

Bridge  Companies • 34 

Number  of  corporators 34 

Method  of  organization 33 

Certificate  to  be  signed  by  each  subscriber 35 

Amount  of  capital 35 

How  to  be  divided 35 

Number  of  directors 35 

Increase  of  capital  stock  by 108,  118 

Must  make  annual  reports M4 


INDEX.  40I 

Bridge  Companies — Continued.  page 

Contents  of  such  reports 145 

Stockholders  liable  until  capital  paid  in 213 

Nature  of  the  liability 222 

Brooklyn,  City  Court  of.     See  Superior  City  Courts. 
Buffalo  Superior  Court.     See  Superior  Court  of  Buffalo. 

Building  and  Elevator  Companies 36 

Number  of  corporators 36 

Method  of  organization 33 

Amount  of  capital 36 

How  changed ^ 105,  108,  118 

Number  of  trustees 37 

Trustees  may  make  by-laws 58 

Stock  books  to  be  kept 151 

To  be  subject  to  inspection  of  stockholders 151 

Loans  to  stockholders  prohibited 163 

Liability  of  directors  for  failure  to  make  annual  report 165 

When  debts  exceed  capital , 179 

Stockholders  liable  until  capital  paid  in 213 

Nature  of  the  liability 222 

Liable  to  laborers,  etc 213 

Nature  of  the  liability 229 

Burglary  :     Companies  to  insure  against  loss  by 16 

Business  Act 333 

What  corporations  may  be  organized  under 8 

For  any  business  except  banking,  insurance,  etc 8 

Purposes  for  which  corporations  have  been  formed  under 9 

Method  of  organization g 

Number  of  corporators 9 

Majority  of  corporators  must  be  citizens  of  the  state ,  10 

Preliminary  certificate,  what  must  contain 10 

Must  be  filed  with  the  secretary  of  state • 10 

Secretary  of  state  will  issue  license 10 

No  subscription  received  unless  ten  per  cent,  paid  in 10 

Capital  stock,  amount  of 120 

May  be  changed 105,  10S,  119 

Shares,  par  value  of 125 

May  be  changed   127 

When  meeting  of  subscribers  to  be  called 11 

Proceedings  at  such  meeting 11 

By-laws  to  be  adopted n 

What  they  must  provide 5S 

Record  of,  to  be  filed  in  office  of  secretary  of  state 11 

Officers  must  be  elected  from  directors 57 

Must  be  president,  secretary  and  treasurer 57 

When  by-laws  amended,  copy  must  be  filed 59 

Corporations  organized  under,  may  re-organize. 79 

Full  liability  companies  may  re-organize  as  limited 77 


402  INDEX. 

Business  Act — Continued.  page 

Other  companies  may  re-organize  under 79 

Certain  companies  excepted  [Note  4] 79 

Whether  companies  organized  under  special  act  may  [Note  4].  79 

Method  of  re-organization 79 

May  change  place  of  business 92 

Certificate  of  change  to  be  filed  and  recorded 92 

Directors,  number  of 11 

May  be  changed 97 

May  declare  forfeiture  of  shares 125 

May  prescribe  other  penalties  for  failure  to  pay  instalments 126 

Certificate  of  stock  must  be  issued 126 

•     May  increase  number  of  shares 127 

Stock    not    to    be    transferred    when    stockholder    is    indebted    to 

company ..  127 

Annual  reports  must  be  made 136 

Within  twenty  days  after  the  first  day  of  January 136 

In  case  corporation  does  business  without  the  United  States.. .  136 

Contents  of  report 137 

Must  be  filed  with  secretary  of  state 137 

Certificate  of  payment  of  stock  must  be  made 137 

Stock  books  to  be  kept 151 

Subject  to  inspection  of  stockholders 151 

Books  of  account  to  be  kept 151 

Subject  to  inspection  of  stockholders 151 

Loans  to  stockholders  prohibited 163 

Liability  of  directors 176 

For  failure  to  make  annual  report 165 

Voting  for  dividends  when  company  is  insolvent 162 

For  signing  a  false  report 176 

Differs  from  Manufacturing  Act 176 

When  debts  exceed  capital 178 

Stockholders  may  examine  books  of 193 

Liability  of  stockholders  under 207 

In  full  liability  companies,  liable  for  all  debts 207 

But  not  until  judgment  against  the  company 207 

In  limited  liability  company,  liable  until  stock  paid  in 208 

Applies  to  all  equitable  owners  of  stock 20S 

Nature  of  the  liability 222 

Method  of  enforcing 223 

Limitations  on  liability  of  stockholders 209 

By-Laws.     Not  inconsistent  with  existing  laws 57 

Unless  authorized  may  not  create  lien  on  shares 5S 

Corporations  have  right  to  make  necessary 57 

Must  be  adopted  at  meeting  within  the  state 58 

Directors  of  certain  corporations  may  make 58 

When  directors  neglect  to  make,  may  be  made  by  stockholders.  .    .  205 

In  certain  corporations,  form  of,  prescribed 58 


INDEX.  403 

By-Laws — Continued.  PAGE 

Amendment,  certain  provisions  as  to 5g 

Regulating  elections  to  be  published 60 

Admissible  in  evidence  to  prove  corporate  transactions 249 

See  Legal  Actions  and  Proceedings ;  Evidence  ;  Forms. 

Capital  Stock.     What  it  represents , 100 

May  be  issued  for  property 100 

Under  the  Manufacturing  Act 101 

Under  the  Business  Act 101 

Title-guaranty  companies 102 

Preferred  stock,  when  may  be^  issued 102 

Change  of,  for  common  stock 104 

Amount  of,  may  be  increased  or  decreased 105 

Increasing  and  decreasing,  by  gas-light  and  navigation  companies,    no 

Title-guaranty  companies. 114 

Building  corporations no 

Business  corporations no 

Water-works  companies 122 

Railroads  in  foreign  countries 118 

Increasing  capital  stock   108 

Insurance  companies 112 

Credit  guaranty  companies 113 

Moneyed  corporations nj 

Safe-deposit  companies uy 

Railroad  companies Iry 

Bridge  companies rig 

Ferry  companies 120 

Driving-park  associations , 120 

Pipe-line  companies I2o 

Stage-coach  companies 122 

Telegraph  companies 122 

Turnpike  companies 122 

Increase  in  case  of  re-organization 118 

Reducing  capital  stock IOc 

Insurance  companies in 


Banks. 


114 


Other  moneyed  corporations n 

Is  personal  property I23 

Shares  may  be  of  any  value  unless  restricted 124 

Fractional  shares  may  be  issued 124 

Certificates  and  transfers  of  stock 123 

Under  the  Manufacturing  Act 124 

Under  the  Business  Act 125 

Title-guaranty  companies   127 

Railroads 128 

Banks I2S 

Safe-deposit  companies 128 

Miscellaneous  corporations 129 


404  INDEX. 

Capital  Stock — Continued.  page 

Directors  are  liable  for  withdrawing  or  distributing 158 

Stockholders  liable  on  unpaid  instalments 219 

Creditor  may  enforce  payment 220 

When  receiver  may  enforce  payment 220 

Return  of  portion  not  conclusive  evidence  of  overvaluation 227 

As  a  basis  for  tax  on  franchises 268 

Cattle:     Organization  of  companies  for  buying,  breeding,  etc 3 

Organization  of  companies  to  insure 15 

Certificate  of  Incorporation. 

May  be  amended 44 

Cannot  make  material  change  by  amending  [Note  3] 44 

.Where  must  be  filed 44 

Conclusive  as  to  location  for  purposes  of  taxation 260 

Certificates  of  Stock:      Stockholders   of     certain    corporations    en- 
titled to 126 

Under  the  Business  Act 126 

Title-guaranty  companies 126 

Not  necessary  to  constitute  one  a  stockholder 18S 

In  case  of  loss  when  new  to  be  issued 188 

Mandamus  will  not  lie  to  compel  transfer  of 190 

Remedy  for  refusal,  an  action  for  damages igo< 

Or  an  equitable  action  to  compel  transfer 190 

City  Court  of  Brooklyn.     See  Superior  City  Courts. 

City  Court  of  New  York:     Jurisdiction  of 237 

City  Court  of  Yonkers:     Jurisdiction  of 23S 

Church  Sheds:     Organization  of  companies  for  constructing,  etc 3 

Coal  and  Farm  Produce:  Organization  of  companies  for  dealing  in, etc.  3 

Coal  and  Peat:     Organization  of  companies  for  buying,  etc 4 

Collateral :     Holder  of  bonds  as,  may  prove  face  value  on  foreclosure 

[Note  1] 81 

Complaint.     See  Legal  Actions  and  Proceedings. 

Consolidation  of  Corporations.      See  Special  Powers  and  Privileges. 

Constitution. 

Provisions  of,  in  regard  to  formation  of  corporations 1 

Acts  prior  to  its  adoption  for  formation  of   2 

Corporate  Name.     See  Name  of  corporation. 

Corporators:     Functions  of,  cease  upon  organization  [Note  2] 6 

County  Courts:     Jurisdiction  of 23S 

Courts,  Jurisdiction  of 235 

Supreme  court 235 

Superior  city  courts •  236 

Superior  court  of  Buffalo 237 

City  court  of  New  York 237 

County  courts 237 

City  court  of  Yonkers 238 

Courts  of  justices  and  district  courts  of  New  York 238 

Courts  of  inferior  jurisdiction  generally 23S 


INDEX.  405 

PAGE 

Credit-Guaranty  Companies 20 

Number  of  corporators 20 

Method  of  organization 20 

Charter,  what  must  set  forth 20 

Amount  of  capital 21 

How  changed 105,108,  113 

When  to  commence  business 21 

Must  make  annual  report  in  month  of  January 140 

Contents  of  report 140 

Must  deposit  same  in  office  of  Insurance  Department 140 

Creditors:     Rights  of,  upon  consolidation ...    76 

Capital  stock  a  fund  for  benefit  of 163 

Liability  of  directors  to,  when  loan  made  to  stockholders 164 

Creditor-stockholder  may  enforce  liability  of  trustee 171 

How  property  distributed  among,  in  case  of  insolvency 309 

Right  to  examine  books  of  receivers 312 

Dairy  Purposes:     Organization  of  companies  for 3 

Debts:     Liability  of  trustees  for.      See  Liabilities  of  Officers  and    Direc- 
tors. 
Demurrer.     See  Legal  Actions  and  Proceedings. 
Directors. 

Number  of,  may  be  changed 96 

Under  the  Manufacturing  Act 96 

Under  the  Business  Act 97 

Insurance  companies 9S 

Title-guaranty  companies 98 

Inland  navigation  companies 146 

Turnpike  and  plankroad  companies 149 

Certain  moneyed  corporations 149 

Books  required  to  be  kept  by 1 50 

Under  the  Manufacturing  Act 150 

Under  the  Business  Act 151 

Building  companies 151 

Hotel  companies 151 

Navigation  companies 151 

Turnpike  and  plankroad  companies 151 

Title-guaranty  companies 151 

May  not  transfer  property  when  company  insolvent 153 

Reports  required. 130 

Occupy  a  fiduciary  position 158 

Holding  over,  certain  acts  void 203 

Duties  of 130 

See  Duties  of  Officers  and  Directors. 

When  may  petition  for  dissolution 2S1 

May  be  made  parties  to  an  action  for  dissolution  or  sequestration 

of  property 292 

Cannot  be  removed  except  by  final  judgment 301 


406 


INDEX. 


PAGE 

Dissolution 2Sl 

Voluntary  dissolution 2°x 

When  directors  may  petition  for 281 

Contents  of  petition . , 2^2 

How  construed 2;33 

Proceedings  upon  application 234 

Court  may  appoint  a  receiver 284 

May  grant  an  injunction 285 

Transfers  prohibited  pending  dissolution 287 

Involuntary  dissolution 2°° 

When  action  for,  may  be  brought 2SS 

To  be  brought  by  the  attorney-general 2SS 

If  he  omits    to  do  so   creditor  or  stockholder  may  apply  for 


leave  to. 


288 


Must  be  a  judgment  creditor 29° 

Court  may  grant  an  injunction 289 

May  appoint  a  receiver 289 

Action  for  sequestration  of  property 291 

When  may  be  brought 291 

Court  may  grant  an  injunction 291 

May  appoint  a  receiver 291 

Officers  and  stockholders  may  be  made  parties 292 

Judgment  for  dissolution  or  sequestration  of  property 293 

Must  provide  for  a  distribution  of  the  property 293 

Where  stockholders  are  parties  to  the  action 293 

Judicial  supervision  of  corporations 294 

When  action  may  be  maintained  for 294 

To  compel  officers  to  account 294 

To  compel   them   to  pay  over  any  property  appropriated  by 

them 294 

To    suspend    or    remove    them    from    office  where    they   have 

abused  their  trust 294 

To  set  aside  an  alienation  of  property  wrongfully  made  by  them  294 

Or  to  restrain  or  prevent  such  an  alienation 294 

May  be  brought  by  the  attorney-general 295 

But  not  for  the  purpose  of  enforcing  private  rights 295 

In  some  cases  by  a  creditor  or  officer 295 

Action  to  annul  corporation •  •  •  •   295 

To  be  brought  by  the  attorney-general  when  directed  by  the 

legislature 295 

Or  upon  leave  of  the  court 296 

Parties  interested  entitled  to  notice   297 

Action  triable  by  jury.  .  ._ 29s 

Injunction  may  issue   298 

Judgment  must  provide  for  a  receiver 298 

General  provisions  applicable  to  the  above  actions 298 

Stockholders  or  officers  not  excused  from  answering  questions.  298 


INDEX.  407 

Dissolution — Continued.  page 

Injunction  may  be  granted  at  any  time 299 

Creditors  may  be  required  to  prove  claims 299 

When  attorney-general  must  bring  an  action  against  a  corporation.    300 

When  brought  upon  information  of  person  having  interest 300 

When  injunction  may  issue 300 

Suspending  general  business  granted  only  by  the  court 300 

Upon  notice  to  the  principal  officer  of  the  corporation 300 

Officer  cannot  be  removed  except  by  final  judgment 301 

Action  to  wind  up  dissolved  corporation 301 

Must  be  brought  by  the  attorney-general 301 

In  any  county  he  may  select 302 

On  whom  summons  to  be  served 302 

Receiver  to  be  appointed 302 

Proceedings  not  stayed  by  any  issue  raised 302 

Corporation  dissolved  upon  expiration  of  its  term  of  existence. .  .  .   302 
Receivers,  when  appointed: 

In  an  action  for  dissolution 302 

In  an  action  to  foreclose  a  mortgage  on  property 302 

In  an  action  to  preserve  the  assets 303 

In  a  proceeding  for  voluntary  dissolution 303 

Notice  of  application  to  be  given 303 

Order  appointing  to  designate  place  of  deposit  of  funds 304 

Whom  the  receiver  represents 3°4 

Property  to  vest  in  receiver 3°4 

Except  in  case  of  insurance  companies 304 

Attorney-general  may  apply  for  removal  of 306 

In  voluntary  proceedings  for  dissolution 306 

Officer  or  stockholder  may  be  appointed 307 

Notice  of  appointment  to  be  given 3°7 

Assignments  and  transfers  of  property  prohibited 307 

Publication  of  notice  of  appointment 307 

General  meeting  of  stockholders  must  be  called 308 

May  retain  amounts  of  pending  actions 30S 

Method  of  distribution  of  funds. 309 

Rendering  final  account 3IQ 

In  involuntary  proceedings  for  dissolution 311 

Must  report  quarterly   311 

Accounts  and  statements  to  be  subject  to  inspection 312 

May  be  removed  by  the  court 312 

Receivers  of  life-insurance  companies 312 

District  Courts  of  New  York:     Jurisdiction  of 23S 

Service  of  summons  out  of 241 

Docks:     Organization  of  companies  for  constructing,  etc 5 

Domestic  Corporation.     Definition  of  the  term 234 

National  bank  doing  business  in  this  state  is  a 23^ 

Corporation  consolidated  from  foreign  corporations  is  a 234 

Property  taxable  same  as  that  of  individuals 259 


408  INDEX. 

PAGE 

Dredging:     Organization  of  companies  for 5 

Dividends  as  a  basis  for  taxes  on  franchises 26S 

Driving  Park  and  Agricultural  Associations 39 

Number  of  corporators 39 

Method  of  organization 33 

When  certificate  may  be  filed 40 

Amount  of  capital 40 

How  changed 105,  108,  120 

Number  of  directors 40 

What  officers  must  be  elected 40 

Must  make  annual  reports 147 

Contents  of  such  reports 147 

Officers  liable  for  all  debts  of 1S0 

Stockholders  liable  until  capital  paid  in 217 

Nature  of  the  liability. 222 

Duration.     When  no  time  limited  charter  perpetual 50 

Existence  may  be  extended 51,  52 

Business  corporations 51 

Banks 5T 

Turnpike  and  plankroad  companies 52 

Duties  of  Officers  and  Directors 130 

Reports  to  be  made 130 

Under  the  Manufacturing  Act 130 

Under  the  Business   Act 136 

Marine-insurance  companies 137 

Fire  and  inland  navigation  companies 138 

Life,  health  and  casualty  insurance  companies 139 

Guaranty  companies 140 

Banks   141 

Safe-deposit  companies 143 

Trust  companies 143 

Railroad  companies 14+ 

Ferry  companies 145 

Guano  companies 14° 

Park  associations 147 

Pipe-line  companies .  .    x47 

When  must  make  statements  for  purposes  of  taxation 264 

Elections  :    By-laws  regulating,  to  be  published 60 

Each  share  of  stock  entitled  to  one  vote T9+ 

Married  women  may  vote I04 

Stock  books  conclusive  as  to  right IQ4 

When  not  held  on  day  designated  new  election  must  be  held 194 

Persons  complaining  of,  may  apply  to  court  for  redress 195 

Moneyed  corporations r95 

Business  corporations I9° 

Cumulative  voting  in J99 

Title-guaranty  companies x99 


INDEX.  409 

Elections — Continued.  page 

Safe-deposit  companies 199 

Railroads 199 

Cannot  be  held  out  of  the  state 201 

Nor  unless  notice  given  to  stockholders   201 

When  stockholders  may  call  meetings 202,  204 

Executors,  administrators,  etc. ,  may  vote 202 

Pledgee  has  no  right  to  vote 202 

Elevators  :  Organization  of  companies  for  constructing,  etc 4,  5 

Evidence.      Corporate  existence,  how  proved   248 

of  foreign  corporation 24S 

By-laws  admissible  to  show  power  of  officers 249 

Corporate  transactions,  how  proved 249 

Execution  :   When  satisfied  only  out  of  property  attached 238 

When  corporation  cannot  be  examined  in  proceedings  supplement- 
ary to 258 

Executors,  etc.      May  vote  on  stock  of  decedent 202 

Existence  of  Corporations.     May  be  extended 51,  52 

Method  of  extending 52 

Explosion  :     Companies  to  insure  against  loss  by 15 

False  Reports:     Liability  for.      See  Liability  of  Officers  and  Directors. 

Fees  of  Secretary  of  State.     (Note  1) 45 

Ferry  Companies 37 

Number  of  corporators 37 

Method  of  organization 33 

Additional  particulars  to  be  stated  in  certificate 37 

Duration  of  the  company 37 

Number  of  directors   37 

When  company  may  commence  business 37 

Directors  may  make  by-laws 5  8 

May  increase  capital  stock 120 

Must  make  annual  reports , T45 

Contents  of  such  reports M5 

Tax  on  franchise 273 

Penalties  for  non-payment 275 

Fictitious  Subscriptions:     Penalty  for  making 1S1 

Fidelity  Companies.      May  guarantee  the  fidelity  of  persons  holding 

positions  of  trust J5 

Fire  and  Inland  Navigation  Insurance  Companies 14 

Number  of  corporators *4 

Method  of  organization J4 

Amount  of  capital J4 

Directors  :    number  and  qualification  of 14 

May  be  changed 9$ 

Must  report  annually x33 

Contents  of  report x38 

Must  deposit  same  in  office  of  Insurance  Department 13S 

Penalty  for  failure  to  make  report 139 


41 0  INDEX. 

Fire  and  Inland  Navigation  Insurance  Companies — Continued.  page 

When  directors  iiable 180 

Tax  on  franchises   278 

Penalties  for  non-payment 27S 

Exempt  from  local  taxation  on   personal  property 260,  279 

Appointment  of  receivers  of 315 

Floating  Elevators  :  Organization  of  companies  for  constructing,  etc.  4 

Foreclosure.     Re-organization  after Si 

See  Re-organization. 

Foreign  Corporations.     What  are  foreign  corporations 234 

Right  to  hold  stock  of 56 

May  sue  and  be  sued  in  the  courts  of  this  state 232 

Principles  governing  such  actions 235 

May  enforce  any  remedy  to  the  same  extent  as  a  citizen 232 

May  assign  cause  of  action  to  a  resident 232 

Action  may  be  maintained  against,  by  a  resident  for  any  cause. . . .  233 

Exception  in  case  of  purely  statutory  action 233 

When  may  sue  another  foreign  corporation 233 

Jurisdiction  of  the  courts  over 235 

Limitations  on  jurisdiction 238 

Service  of  summons  upon \ 239 

Not  necessary  that  officer  be  here  in  his  official  capacity 240 

Extent  of  agency  of  officer  required  to  give  jurisdiction 241 

When  may  be  served  by  publication 242 

Complaint  must  state  under  what  laws  corporation  is  organized. . .  243 

Verification  of  pleadings  by 245 

Cannot  plead  usury 245 

Cannot  plead  the  statute  of  limitations 246 

Exception  in  action  for  causing  death 246 

May  be  compelled  to  give  security  for  costs 246 

In  action  on   promissory  note   time  to  answer  will  not  be  extended 

except  upon  notice 247 

Corporate  existence  of,  how  proved   248 

Property  may  be  attached 250 

Even  though  receiver  has  been  appointed  in  another  state 251 

Unissued  bonds  in  the  hands  of  its  agent  in  this  state  cannot  be.  252 

Nor  shares  of  a  non-resident  in  stock  of 252 

Nor  property  of  national  banks 252 

Judgment  upon  default,  against 257 

What  proofs  are  required  to  enter 257 

Against  what  property  judgment  can  be  enforced 257 

Judgment  creditor  may  maintain  action  for  the  discovery  of  prop- 
erty of 258 

Taxable  on  property  invested  in  business  in  this  state 265 

When  taxed  on  business  done  in  this  state 271,  273 

Forfeiture  for  Non-user 47 

Corporate  powers  cease  unless  business  commenced  in  one  year. .  .  47 

Must  be  such  business  as  company  has  right  to  do 47 


INDEX.  41* 

Forfeiture  for  Non-user.— Continued.  PAGE 

Certain  corporations  excepted  from  this  provision 47 

Forfeiture  of  Shares:  Company  cannot  declare  unless  authorized. . .  .   124 

May  be  declared  under  the  manufacturing  act 124 

Under  the  business  act 125 

Title  guarantee  companies i27 

Railroads I2S 

Banks 12S 

Safe  deposit  companies I28 

Miscellaneous  corporations I29 

Forms.     Certificate  of  incorporation  under  the   Manufacturing  Act 367 

Preliminary  certificate  under  the  Business  Act 368 

License  under  the  Business  Act 3^9 

Commissioners'  report  and  record  of  proceedings 37© 

By-laws 373 

Certificate  of  payment  of  capital  stock 3/S 

Annual  report  under  the  Manufacturing  Act 37$ 

Annual  report  under  the  Business  Act 379 

Assent  to  mortgage 379 

Acknowledgment  by  corporation 380 

Verification  of  pleading  or  petition 380 

Report  to  state  comptroller  for  purposes  of  taxation 381 

Statement  for  local  taxation 3$3 

Franchises.     Taxation  on,  for  purposes  of  state,  act  for 353 

See  Taxation. 

Gas-Light  Companies 34 

Number  of  corporators 34 

Duration  of  company 34 

Method  of  organization 33 

Directors,  number  of 34 

May  make  by-laws 58 

May  change  amount  of  capital  stock lxo 

Directors  of,  voting  for  certain  dividends  liable 162 

Liability  for  failure  to  make  annual  report I05 

Stockholders  liable  until  capital  paid  in 2I4 

Nature  of  the  liability 222 

Liable  to  laborers,  etc 2 1  -1 

Nature  of  the  liability 229 

Property  of,  may  be  exempted  from  taxation  [Note  1] 259 

General  Assignment.     See  Insolvent  Corporations. 

Guano  Companies 3s 

„Q 

Number  of  corporators -5° 

Method  of  organization 33 

Duration  of  company 38 

Trustees,  number  of.  .    3° 

May  make  by-laws 3° 

Must  make  annual  reports 146 

Contents  of  such  reports r46 


412  INDEX. 

Guano  Companies. — Continued.  page 

Directors  voting  for  certain  dividends  liable ; . .  162 

Stockholders  liable  until  capital  paid  in 214 

Nature  of  the  liability :  .  . 222 

Liable  to  laborers,,  etc 214 

Nature  of  the  liability 229 

Guaranty  Companies.     When  may  be  organized  under  the  Business 

Act 9>  -4s 

Halls  :  Organizing  of  companies  for  purchasing  and  acquiring,  etc. ...  4 

Homestead  Corporations 40 

Number  of  corporators .  4a 

Method  of  organization 33 

Hotel. Companies 42 

Number  of  corporators 42 

Method  of  organization 33 

Amount  of  capital 42 

Trustees,  number  of : 42 

May  make  by-laws 58 

Stock  books  to  be  kept 151 

Subject  to  inspection  of  stockholders 151 

Stockholders  liable  to  an  amount  equal  to  stock  held 215 

See  Appendix  E 3§5 

Hot  Water  and  Steam  :  Organization  of  companies  for  supplying,  etc.  3 

Ice  :  Organization  of  companies  for  collecting  and  storing 3 

Increasing  Capital  Stock.     See  Capital  Stock. 

Injunction  :  Corporation  may  be  restrained  by 252 

In  action  by  the  attorney-general 252 

Cases  in  which  an  injunction  has  issued „ 253 

When  can  be  granted  only  by  the  court 253 

Service  of  an  injunction  order,  how  made 254 

When  may  issue  upon  dissolution 2S9,  299,  300 

In  action  for  sequestration  of  property 291,  299 

In  action  to  annul 298,  299 

Inland  Navigation  Companies 37 

Number  of  corporators   37 

Method  of  organization 33 

Amount  of  capital 37 

How  changed • no 

Number  of  directors 38 

Directors  voting  for  certain  dividends  liable 162 

Must  make  annual  reports 146 

Contents  of  such  reports 14° 

Liable  for  making  false  reports 178 

Stockholders  liable  until  capital  paid  in 216 

Nature  of  the  liability 222 

Liable  to  laborers,  etc 216 

Nature  of  the  liability 229 

Tax  on  franchises 273 


INDEX.  4J3 

Inland  Navigation  Companies. — Continued.  page 

Tax  on  franchises,  penalty  for  non-payment 275 

Insolvent  Corporations.    May  not  make  transfers  of  property 153 

May  not  make  general  assignment  for  benefit  of  creditors 153 

Insolvency:  When  corporation  may  be  dissolved  for 281,  288 

When  property  may  be  sequestrated 291 

Insurance  Companies.    May  be  consolidated 71 

Agreement  to  be  submitted  to  superintendent  of  insurance  de- 
partment   71 

Assent  of  stockholders  necessary 72 

Agreements  to  be  filed 72 

May  change  name \ 96 

Notice  of  intention  to  be  published .  .    96 

Superintendent  of  insurance  department  must  consent 96 

Directors,  number  of,  may  be  changed 98 

May  decrease  amount  of  capital  stock 1 1 1 

May  increase  amount  of  capital  stock 112 

No  personal  liability  of  stockholders 210 

Tax  on  franchise 272,  273 

Penalties  for  non-payment 275 

Insurance  and  Guaranty  Companies.     May  invest  surplus  in  stock  of 

ether  companies - 55 

Exception  in  case  of  life-insurance  companies 55 

Directors  may  make  by-laws 58 

Involuntary  Dissolution.   See  Dissolution. 

Judgment.   Whether  a  debt  within    terms  of  statute    making    trustees 

liable  [Note  3] 166 

Entry  of,  against  foreign  corporations 257 

What  must  be  shown  by  plaintiff 257 

Against  what  property  may  be  enforced 257 

What  must  provide  in  case  of  dissolution 293 

Judgment  Creditor.   Cannot  maintain  action  against  domestic  corpora- 
tion to  compel  discovery  of  property 258 

When  he  may  against  a  foreign  corporation 258 

When  he  may  to 'procure  sequestration  of  property 25S,  291 

When  may  bring  action  for  dissolution 288 

Having  no  lien  on  property,  not  entitled   to  notice  of  application 

for  dissolution 291 

Judicial  Supervision:  Action  for 294 

See  Dissolution. 

Laborers,  etc.:    Liability  of  stockholders  to 229 

Who  constitute  the  class. . .  , 229 

Service  must  be  manual 229 

To  be  paid  weekly  [Note] 231 

To  be  paid  in  cash  [Note] 231 

Wages  of,  preferred  in  case  of  insolvency 318 

Land:  Organization  of  companies  for  improving,  etc 5 

Laundry  Purposes:  Organization  of  companies  for 3 


414  INDEX. 

PAGE 

Legal  Actions  and  Proceedings 232 

Corporations  may  sue  and  be  sued 232 

Practice  governed  by  the  Code  of  Civil  Procedure 232 

May  be  proceeded  against  criminally  [Note  2] 232 

When  foreign  corporations  may  be  sued 232 

Action  against  a  foreign  corporation  may  be  maintained  by  a 

resident  for  any  cause 233 

Exception  in  case  of  statutory  action ." 233 

When  action  may  be  brought  against  foreign  corporation  by 

non-resident 233 

Jurisdiction  of  the  courts 235 

Of  the  Supreme  Court 235 

Superior  City  Courts 235 

Superior  Court  of  Buffalo. . .    237 

City  Court  of  New  York 237 

County  Courts 23S 

City  Court  of  Yonkers 23S 

Courts  of  Justices  and  District  Courts  of  New  York  23S 

Courts  of  inferior  jurisdiction  generally 23S 

Service  of  summons 239 

In  justices'  courts 241 

By  publication 242 

Pleadings 243 

Must  state  whether  domestic  or  foreign  corporation 243 

What  necessary  to  raise  issue  of  corporate  existence 243,  244 

How  issue  of  misnomer  raised 244 

Verification  of 245 

Cannot  plead  usury 245 

When   moneyed    corporation    cannot    plead  statute    of  limita- 
tions   246 

Foreign  corporations  cannot  plead  statute  of  limitations 246 

Preparation  for  trial 246 

In  an  action  on  a  note,  time  to  answer  will  not  be  extended  ex- 
cept upon  notice 247 

Such  an  action  entitled  to  a  preference 247 

Order  for  trial  must  be  served  with  answer  or  demurrer 247 

How  production  of  books  or  papers  compelled 247 

Evidence 248 

How  corporate  existence  proved 248 

By  laws  admissible  in  evidence 249 

Books  of  foreign  corporation  presumptive  evidence 249 

When  copy  may  be  used 249 

When  admissions  of  member  of  corporation  not  a  party  to  the 

action  will  be  received 250 

When  declarations  of  an  officer  of  a  corporation,  which  is  a 

party,  are  admissible 250 


INDEX.  415 

Legal  Actions  and  Proceedings.— Continued.  1AGE 

Provisional  remedies   ,,,<-, 

When  warrant  of  attachment  may  be  granted 250 

Not  against  a  national  bank 250 

What  may  be  levied  on 250  251 

When  injunction  will  issue 2-2  251 

Can  be  granted  only  by  court  in  certain  cases 253 

How  order  served „.  . 

254 

Receiver,  when  appointed 2^4 

When  notice  of  application  must  be  given 255 

Of  life-insurance  companies  will  not  be  appointed  where  com- 
pany has  funds 25  - 

Where  application  for,  must  be  made 255 

Copy  of  papers  to  be  served  upon  attorney-general 256 

Judgment  and  execution 257 

Where  defendant  is  a  foreign  corporation 258 

What  execution  must  require  when  property  has  been  attached.  258 
'  When  corporation  cannot  be  examined  in  proceedings  supple- 
mentary to  execution 25S 

Judgment  creditor's  action  does  not  lie  against  domestic  cor- 
poration.   2,g 

Action  to  sequestrate  property  may  be  maintained 258 

When  a  judgment  creditor's  action  may  be  maintained  against 

foreign  corporations ,  25S 

Actions  to  enforce  liability  of  directors 160 

Pleadings  strictly  construed j6o 

Action  abates  upon  death  of  either  party 170 

Cannot  be  interposed  as  a  counter-claim 171 


Penal  in  its  nature. 


172 


Where  action  must  be  tried \-]\t   j-6 

Where  debts  exceed  capital x-g 

Compelling  issue  of  new  certificate  in  case  of  loss iSS 

Application  by  petition  to  the  court iSS 

Copy  of  petition  to  be  served. ...    xSg 

Compelling  transfer  of  stock !g0 

Mandamus  will  not  lie  to  compel mo 

Action  for  damages  for  refusal  to  transfer igo 

Equitable  action  may  be  brought  in  certain  cases 190 

Corporation  may  defend  such  an  action jgo 

Proceedings  when  directors  wrongfully  hold  over 203 

Actions  to  enforce  liability  of  stockholders 223 

When  receiver  may  enforce 220,   223 

When  creditors  may  collect  subscriptions 220 

Actions  to  procure  dissolution  of  a  corporation 2SS 

For  sequestration  of  property 201 

For  the  supervision  of  corporations 294 

To  annul  a  corporation 295 


4l6  INDEX. 

PAGE 

Liabilities  of  Officers  and  Directors , 158 

Liable  as  trustees 15§ 

For  withdrawing  capital   158 

For  receiving  notes  in  payment  of  instalments 159 

For  receiving  or  purchasing   shares  of  stock    of  own  corporation 

[Note] 159 

For  exchanging  same  for  shares  of  other  corporations  [Note] 159 

Of  moneyed  corporations 160 

For  making  loans  to  directors 160 

Of  manufacturing  corporations 161 

Of  business  corporations 161 

Of  gas-light  companies 162 

Of  guano  companies 162 

Of  inland  navigation  companies 162 

These  provisions  for  benefit  of  creditors 162 

For  loans  to  stockholders 163 

For  failure  to  make  annual  report 164 

Wholly  a  statutory  liability - 165 

Separate  actions  to  recover  for,  may  be  brought 166 

May  be  brought  against  one  or  all  the  directors 166 

Prior  action  against  corporation  not  necessary 166 

Must  be  for  existing  debt •  166 

As  to  whether  a  judgment  is  such  debt,  query  [Note  3] 166 

Limited  to  debts  contracted  while  trustee 168 

Resignation  terminates  liability 168 

What  sufficient  to  constitute  resignation  [Note  3] 168 

Not  liable  for  debt  imposed  by  fraud 169 

Nor  for  tortious  act  of  the  corporation 169 

Nor  for  contingent  obligation 169 

Plaintiff  held  to  strict  proof  of  cause  of  action 169 

Action  must  be  brought  within  three  years 170 

Is  penal  in  its  nature 170 

Abates  upon  the  death  of  either  party 17° 

Cannot  be  interposed  as  a  counter-claim 170 

Where  must  be  tried 171 

Not  liable  to  co-trustee 1 7 J 

For  making  false  reports I72 

Liability  highly  penal l72 

Under  the  Manufacturing  Act ' 172 

Under  the  Business  Act 176 

Gas-Light  Companies 176 

Guano  Companies 176 

Ferry  Companies 17° 

Independently  of  statute 178 

Where  debts  exceed  capital 178 

Liability  contractual 179 

All  trustees  assenting  must  be  joined ., 179 

All  creditors  must  be  made  parties 1 79 


INDEX.  4*7 

Liabilities  of  Officers  and  Directors.— Continued.  PAGE 

In  certain  corporations  liable  for  all  debts 180 

Misdemeanor  for  railroad  officer  to  sell  stock  which  he  does  not  own.   1S1 
For  persons  to  sign  ficticious  name  to  subscription  for  stock. .  .    1S1 
For  officer  of  corporation   to  issue   stock  without  being  duly- 
authorized  182 

To  reissue  surrendered  or  cancelled  stock 182 

To  exhibit  false  books  or  reports 182 

To  attach  name  to  circular  or  prospectus  without  authority. . . .    182 

To  make  dividend  except  from  surplus  profit 183 

To  divide  property  among  stockholders 183 

To  receive  notes  in  paymen^of  instalment 183 

To  apply  funds  to  the  purchase  of  its  own  stock 183 

To  receive  such  shares  in  payment  of  a  debt  due  the  com- 
pany     1 83 

To  exchange  shares  for  those  of  another  corporation 1S3 

To  make   loans  or  discounts  by  a  bank   in  excess   of  amount 

authorized 184 

To  make  loans  by  same  to  directors  in  excess  of  amount  author- 
ized      r  84 

To  assent  to  issuing  notes  by  such  company  beyond  amount 

authorized 184 

To  overdraw  account  in  such  bank 185 

To  receive  deposits  when  bank  is  insolvent 185 

To  receive  property  of  company  without  making  an  account  of 

it 185 

To  publish  false  reports 185 

Liabilities  of  Stockholders 206 

Under  the  Manufacturing  Act 206 

Under  the  Business  Act 207 

Insurance  companies 210 

Banks 210 

Safe-deposit  companies 211 

Trust  companies 212 

Railroads 212 

Bridge  companies 213 

Building  companies 213 

Gas-light  companies 214 

Guano  companies 214 

Hotel  companies 215 

Navigation  companies 215 

Inland-navigation  companies 216 

Park  associations 217 

Pipe-line  companies 217 

Stage-coach  companies 217 

Telegraph  companies 218 

Plankroad  and  turnpike  companies 218 


41 8  INDEX. 

Liabilities  of  Stockholders. — Continued.  page 

On  unpaid  stock 219 

Must  be  a  subscriber 219 

Not  necessary  to  have  a  certificate 219 

Nor  that  shares  be  allotted   220 

When  may  be  enforced  by  creditor 220 

When  may  be  enforced  by  receiver 220 

Defences'of  stockholder 221 

Till  capital  is  paid  in 222 

As  copartner  with  the  corporation 222 

Continues  notwithstanding  dissolution 222 

When  creditor  may  enforce 223 

Not  for  the  benefit  of  all  creditors 223 

When  court  may  restrain  separate  actions 223 

Statute  will  be  strictly  construed 224 

Judgment   against   corporation   not   conclusive   against  stock- 
holder  •• 225 

That  he  is  a  creditor  of  the  company  is  a  defence 226 

That  plaintiff  was  a  stockholder  is  a  defence 226 

Where  capital  is  issued  for  property 227 

Under  the  Manufacturing  Act 227 

Must  be  issued  at  fair  valuation 227 

None  for  debts  incurred  before  he  became  a  stockholder 228 

Terminated  by  extension  of  indebtedness 228 

No  defence  that  time  to  file  certificate  had  not  expired 228 

To  laborers,  etc 229 

Who  are  laborers,  servants,  and  apprentices 229 

Must  be  manual  laborers 229 

Lien  upon  Shares:. Company  cannot  create,  unless  authorized 124 

Life,  Health,  and  Casualty  Insurance  Companies 15 

Number  of  incorporators 15 

May  insure  lives 15 

Health 15 

Against  accident 15 

Against  loss  by  lightning  [Note  2] 14 

Against  loss  by  storms  [Note  2] 14 

Cattle 15 

Plate-glass J  5 

Steam-boilers IS 

Guarantee  the  fidelity  of  persons 15 

Method  of  organization 16 

Charter,  what  must  set  forth 16 

Directors,  qualifications  of 16 

Capital,  amount  of *7 

Charter  to  be  approved  by  the  attorney-general 17 

Must  make  report  annually   r39 

Contents  of  report J39 

Must  deposit  same  in  office  of  insurance  department 139 


INDEX.  419 

Life,  Health,  and  Casualty  Insurance  Companies. — Continued.  page 

Appointment  of  receivers  of 305,  312 

Lightning  :    Companies  to  insure  against  loss  by  [Note  2] 14 

Limitations.     See  Statute  of  Limitations. 

Limited  Liability  Companies 46 

"  Limited  "  to  form  part  of  name  of 46 

Mandamus:  Officer  may  be  compelled  by,  to  file   certificate   of  organi- 
zation [Note  3] 6 

Will  not  lie  to  compel  company  to  issue  new  certificate  of  stock.  . .  190 

Manufacturing  Act 321 

Corporations  may  be  organized  under,  for  the  following  purposes  : 

Advertising 2 

Agricultural  purposes 4 

Cattle  buying,  breeding,  etc 3 

Church  sheds,  erecting,  etc 3 

Coal  and  peat,  dealing  in,  etc 4 

Coal  and  farm  produce,  dealing  in,  etc 3 

Dairy  purposes 3 

Depots,  constructing,  etc 5 

Dredging  and  dock-building 5 

Elevators,  building,  etc 4,  5 

Farm  produce,  dealing  in,  etc 3 

Halls,  constructing,  etc 4 

Hot  water  and  steam,  supplying,  etc 3 

Ice,  collecting  and  storing 3 

Land,  improving,  etc   5 

Manufacturing 2 

Mineral  water,  bottling,  etc 3 

Mining 2 

News  agencies,  maintaining,  etc 5 

Oil,  transporting,  etc 5 

Printing  and  publishing 2 

Railway  depots,  owning  and  constructing 5 

Raising  vessels,  etc 3 

Real  estate  business 3 

Residences,  purchasing,  etc 4 

Salvage,  etc 4 

Skating  rinks,  constructing,  etc   4 

Slaughtering  animals 4 

Steam,  supplying,  etc   3 

Towing  vessels,  etc 3 

Transporting  oil 5 

Vessels,  raising,  etc 3 

Warehouses,  constructing,  etc 5 

Water,  furnishing  for  mining,  etc 5 

Water,  furnishing  for  power,  etc 5 

Method  of  organization  under 6 

Certificate  to  be  made  and  filed 6 


420  INDEX. 

Manufacturing  Act.  — Continued.  PAGE 

Name  of  company 7 

May  be  changed 93 

Objects  for  which  corporations  may  be  formed  under 7 

Capital,  may  be  issued  for  property 101 

Capital  stock,  amount  of ■. 7 

May  be  increased  or  decreased 105 

Existence,  term  of 7 

Shares,  number  of 8 

May  be  changed 125 

Trustees,  number  of S 

May  be  changed 96 

Places  of  business,  to  be  designated 6,  8 

May  be  changed 90 

Amended  certificate  to  be  filed 91 

When  may  hold  stock  of  other  companies 54 

By-laws,  to  be  made  by  directors ; 58 

Reorganization  of,  after  sale.      See  Appendix  E 3S5 

Increasing  and  diminishing  capital  stock 108 

Stock  of  companies,  personal  estate 124 

May  declare  stock  forfeited  for  non-payment  of  calls 124 

May  increase  number  of  shares 125 

Stockholders  entitled  to  certificate  of  increase 125 

Annual  reports 1 30 

Must  be  made  within  twenty  days  after  the  first  day  of  Jan- 
uary  131,  133 

Insolvency  no  excuse  for  not  making 134 

Must  be  signed  by  president  and  a  majority  of  trustees 131 

What  must  be  stated 132 

Substantial  compliance  with  statute  sufficient 132 

What  report  held  sufficient  [Note  3] 133 

Must  be  published  in  newspaper  where  corporation  located... .  134 

Must  be  filed  in  the  office  of  the  county  clerk 134 

Filing  and  publishing  not  necessarily  within  the  twenty  days. .  135 

Certificate  of  payment  of  stock  must  be  filed 135 

Upon  increase  of  stock 136 

Stock  books  to  be  kept 150 

To  be  subject  to  inspection  of  stockholders 151 

Trustees  liable  if  dividends  paid  when   company  is  insolvent 161 

Loans  to  stockholders  prohibited 163 

Trustees  liable  for  failure  to  make  annual  report 164 

Trustees  liable  when  debts  exceed  the  capital 178 

When  stockholders  may  require  statements  of  affairs 193 

Penalty  for  refusal  to  furnish 193 

Stockholders  liable  until  capital  paid  in 206 

But  not  when  stock  is  issued  for  property 206,  227 

Liable  as  copartner  with  the  corporation 222 

Right  of  creditor  to  enforce 223 


INDEX.  421 

Manufacturing  Act. — Continued.  page 

Stockholders  liable  in  case  of  increase  of  capital  stock 225 

Defence  of  stockholder  in  action  to  enforce 226 

Stockholder  liable  to  laborers,  etc 206 

Nature  of  the  liability , 229 

Executors,  administrators,  etc.,  not  liable 207 

Holders  of  stock  issued  for  property  not  liable 227 

Unless  fraudulent  overvaluation 227 

Not  all  companies  organized  under,  exempted  from  state  tax  on 

franchises 270 

See  Appendix  E 385 

Manufacturing  Purposes  :   Organization  of  companies  for 2 

Corporations  organized  for,  may  consolidate 68 

Method  of  consolidation 68 

Agreement  for,  to  be  made 69 

Meeting  of  stockholders  to  be  called 69 

Stock  of  dissenting  stockholders  to  be  appraised 69 

Copies  of  agreement  to  be  filed 70 

Powers  of  old  companies  to  vest  in  new 71 

Corporations  organized  for,  not  liable  to  state  tax  on  franchises.. ..  267 
What  are  manufacturing  companies  within  the  provision  of  the  act. .   270 

Marine  Insurance  Companies 12 

Method  of  organization 12 

Number  of  corporators 12 

Charter  to  be  approved  by  the  attorney-general 12 

What  should  set  forth 12 

Of  thirty  years'  duration 13 

Must  make  report  annually  in  January 137 

Contents  of  report.  .  .  .-. 137 

Must  deposit  same  in  office  of  insurance  department 137 

When  directors  are  liable 181 

Tax  on  franchises 278 

Penalties  for  non-payment 278 

Exempted  from  local  taxation  on  personal  property 260,  279 

Married  Women  :  May  vote  at  all  elections 194 

Mineral  Water:  Organization  of  companies  for  bottling,  etc 3 

Mining  Companies  :  Organization  of 2 

Minority  Representation:  Of  stockholders  under  the  Business  Act.  . .    199 

Misdemeanors:  Certain  acts  of  officers  made  misdemeanors 181 

See  Liability  of  Officers  and  Directors. 

Moneyed  Corporations  :  Term  defined 60,   154 

By-laws  regulating  elections  to  be  published 60 

Certain  assignments  by,  prohibited 155 

Cannot  make  assignment  in  contemplation  of  insolvency 156 

Or  with  intent  to  give  preference  to  any  creditor 156 

Transferee  of  notes  so  made  cannot  recover  on 156 

May  reduce  amount  of  capital  stock 115 

May  increase  their  stock 115 


422 


INDEX. 


Moneyed  Corporations.— Continued.  PAGE 

Must  make  annual  report - x49 

Certain  loans  forbidden IDO 

Officers  liable  in  case  of  fraudulent  insolvency 186 

Must  report  to  local  assessors  for  purposes  of  taxation 264 

Tax  on  franchises 279 

Mortgage  Companies:  Act  for  the  supervision  of.     See  Appendix  E..   385 

Mortgages  :  Special  provisions  regulating 61 

Mortgage  of  franchises DI 

Manufacturing  corporations 61 

Business  corporations 63 

Building  companies 6 

•    Gas-light  companies °4 

Railroads °4 

Rolling-stock  of,  not  real  estate 64 

Chattel  mortgage  of,  need  not  be  filed  in  town 64 

Stage-coach  companies 6+ 

May  be  made  to  secure  future  advances 65 

Assent  of  stockholders  to 65 

Subsequent  assent  validates DO 

Where  real  estate  is  out  of  the  State 67 

Failure  to  file  assent 67 

Municipal  Taxation.     See  Taxation. 

Name  :  Generally  any  may  be  chosen 46 

Not  the  same  as  an  existing  corporation 40 

Nor  one  nearly  resembling  the  same 4° 

Of  insurance  companies 4° 

When  "  Limited  "  to  form  part  of 40 

Provisions  of  the  business  act  as  to 4° 

How  may  be  changed 93 

Certain  corporations  not  included 93 

Application  must  be  made  to  the  court 93 

Notice  of,  to  be  published 94 

When  court  will  make  order 94 

National  Banks  :  Property  of,  cannot  be  attached 252 

Shares  of  stock  of,  how  taxable 205 

Navigation  Companies.     See  also  Inland  Navigation  Companies. 

Number  of  corporators 3° 

Method  of  organization 33 

Additional  particulars  to  be  stated  in  certificate 36 

Amount  of  capital 3° 

How  changed io5,  10S,  1 10 

Number  of  directors 3° 

Directors  may  make  by-laws 5& 

Stock  books  to  be  kept I5I 

To  be  subject  to  inspection  of  stockholders I51 

Stockholders  liable  until  capital  paid  in 215 

Nature  of  the  liability 222 


INDEX.  423 

Navigation  Companies. — Continued.  1AGE 

Liable  to  laborers,  etc 2I5 

Nature  of  the  liability   229 

Stockholder  includes  equitable  owner  of  stock 215 

Engaged   in   foreign   commerce   may    be   exempted    from   taxation 

[Note  1] 259 

Tax  on  franchises "  " 273 

Penalties  for  non-payment •••   275 

Navigation  and  Salvage  :  Organization  of  companies  for 4 

News  Agencies  :  Organization  of  companies  for  receiving,  etc 5 

New  York  City  Court.     See  City  Court  of  New  York. 

New  York  District  Courts.  1  See  District  Courts  of  New  York. 

Non-User.     See  Forfeiture  for  Non-User. 

Officers  :  Right  to  appoint 5° 

Certain  acts  prescribe  what  officers  shall  be  chosen 57 

May  be  made  parties  to  an  action  for  dissolution    or  sequestration 

of  property 292 

When  not  excused  from  answering  questions 298 

Cannot  be  removed  except  by  final   judgment 301 

See  Duties  of  Officers  and   Directors;    Liabilities   of   Officers   and 
Directors. 

Oil :    Organization  of  companies  for  storing  and  conveying 5 

Organization  of  Corporations 1 

Advertising  companies 2 

Agricultural  companies 4 

Banks. 21 

Building  companies 3° 

Bridge  companies 34 

Business  companies 8 

Cattle,  companies  for  buying,  etc 3 

Church  sheds,  companies  for  erecting 3 

Credit- guaranty  companies 20 

Coal  and  farm-produce  companies 3 

Coal  and  peat  companies 4 

Dairy  purposes,  companies  for 3 

Depots,  companies  for  erecting 5 

Dredging  and  dockbuilding  companies 5 

Elevators,  companies  for  building,  etc 4,  5,  36 

Farm  produce,  companies  for  dealing  in 3 

Ferry  companies 37 

Gas-light  companies 34 

Guano  companies 3$ 

Guaranty  companies I5»  iS,  20 

Halls,  companies  for  constructing,  etc 4 

H  omestead   corporations 40 

Hot  water  and  steam  companies 3 

Hotel  companies 42 

Ice,  companies  for  collecting,  etc 3 


424 


INDEX. 


Organization  of  Corporations.— Continued.  PAGE 

Insurance  companies,  fire  and  inland  navigation 14 

Insurance  companies,  life,  health,  and  casualty 15 

Insurance  companies,  marine I2 

Manufacturing  companies 2 

Mineral-water  bottling  companies 3 

Mining  companies = 2 

Navigation   companies 4.  3°>  37 

News  agencies 5 

Oil  transportation  companies 5 

Park  associations   3°.  39 

Pipe-line  companies 42 

Plank-road  companies 34 

Printing  and  publishing  companies - 2 

Railroad  companies 29>  31 

Railroad  supply  companies 41 

Railway  depots,  companies  for  constructing 5 

Raising  vessels,  companies  for 3 

Real  estate,  companies  for  purchasing,  etc 3 

Residences,  companies  for  purchasing,  etc 4 

Safe-deposit  companies 23 

Salvage  companies 4 

Skating-park  associations 3* 

Skating  rinks,  companies  for  constructing 4 

Slaughtering  companies 3 

Stage-coach  companies 39 

Steam-supply  companies   3 

Telegraph  companies 35 

Title-guaranty  companies *S 

Towing  companies 3 

Tramway  companies 43 

Transporting  oil,  companies  for 5 

Trust  companies 24 

Turnpike  companies 34 

Vessels,  companies  for  raising,  etc 3 

Warehouse  companies 5 

Water  companies 5  >  4° 

Choice  of  laws  under  which  to  organize '. 47 

Whether  companies  may  organize  under  general  act  where  special 

act  exists 4» 

Certificate:  may  be  amended 44 

Only  to  cure  patent  defects  [Note  3] 44 

Must  be  filed  and  recorded   44 

Cannot  be  filed  or  recorded  until  fees  paid 44 

Nor  until  organization  tax  is  paid 45 

Fee  for  recording  [Note  1] 45 

Fees  of  Secretary  of  State  [Note  1] 45 


INDEX.  425 

PAGE 

Organization  Tax 45 

Certain  corporations  must   pay  tax  for  organization 45 

Applies  to  reorganization  of  the  company 46 

May  not  exercise  corporate  rights  until  paid 46 

Park  Associations.      See  Driving  Park  and  Agricultural  Associations. 
Personal  Property  :  How  taxable.     See  Taxation. 

Pipe-Line  Companies 42 

Number  of  corporators 42 

Method  of  organization 33 

Additional  particulars  to  be  stated  in  certificate 42 

Amount  of  capital ( 42 

When  certificate  may  be  filed 42 

Affidavit  to  be  annexed  thereto 42 

Number  of  directors 43 

May  condemn  land  [Note] 43 

Not  in  City  of  New  York  [Note] 43 

May  not  purchase  stock  of  other  companies 55 

May  increase  capital  stock 120 

Must  make  monthly  statements 147 

Contents  of  such  statements M7 

Must  make  annual  reports 148 

Penalty  for  failure  to  make 14S 

Stockholders  liable  until  capital  paid  in 217 

Nature  of  the  liability 222 

Liable  to  laborers,  etc 217 

Nature  of  the  liability 229 

Tax  on  franchise 273 

Penalties  for  non-payment 275 

Place  of  Business 9° 

May  be  changed 9° 

Under  the  Manufacturing  Act   9° 

Business  corporations 92 

Banks 92 

Plankroad  and  Turnpike  Companies 34 

Number  of  corporators 34 

Notice  of  organization  to  be  published 34 

Method  of  organization 33 

Duration  of  company 34 

Affidavit  of  payment  of  stock  necessary 34 

May  change  amount  of  capital  stock 105,  10S,  122 

May  reorganize  after  foreclosure  [See  Reorganization] S7 

Stockholders  liable  to  an  amount  equal  to  stock  held 21S 

Summary  method  of  enforcing  liability 219 

Plate  Glass  :  Companies  to  idsure 15 

Pleadings.     Corporate  existence,  how  alleged 243 

What  is  sufficient  denial  of 244 

Misnomer  waived  unless  pleaded 244 

Verification  of 245 


426  INDEX. 

Pleadings. — Continued.  PAGK 

Usury  cannot  be  pleaded 245 

When  statute  of  limitations  cannot  be  pleaded 246 

See  Legal  Actions  and  Proceedings. 

Pledgee  of  Stock  :  No  right  to  vote  on  unless  transferred  to  him 202 

Powers  and  Privileges  of  Corporations 49 

General  powers 49 

Charter  perpetual  unless  limited 50 

May  extend  term  of  existence 51 

Manufacturing  corporations 51 

Business  corporations 51 

Banks 51 

Turnpike  and  plank-road  corporations 52 

Generally 52 

The  corporate  seal , 53 

Right  to  hold  real  estate 53 

Lands  in  other  countries ,....■ 53 

Adjacent  lands 54 

Right  to  hold  stock  of  other  companies 54 

No  implied  right  to  subscribe  for  [Note  2] 54 

Manufacturing  corporations 54 

Insurance  and  guaranty  companies 55 

Railroads. 55 

Pipe-line  companies 55 

Right  to  hold  stock  of  foreign  corporations 56 

Provision  broader  than  that  of  domestic  corporations 56 

Officers,  corporations  have  the  right  to  appoint  necessary 56 

Bylaws,  corporations  may  make  necessary 57 

Incidental  powers  and  privileges 60 

Rights  to  mortgage  property 61 

Manufacturing  corporations 61 

Business  corporations ...  63 

Building  companies 63 

Gas-light  companies 64 

Railroads   64 

Stage-coach  companies 64 

Mortgages  may  be  made  to  secure  future  advances 65 

Assent  of  stockholders  required  to  be  filed 65 

Where  real  estate  is  out  of  the  state 67 

Special  powers  and  privileges 68 

Certain  corporations  may  consolidate 6S 

Corporations  organized  for  manufacturing  purposes 68 

Insurance  companies 71 

Banks 72 

Railroads 74 

Telegraph  companies 76 

Rights  of  creditors  on  consolidation 76 

Companies  not  extinguished  by  consolidation 77 


INDEX.  427 

Powers  and  Privileges  of  Corporations.  —  Continued. 

Reorganization  as  "  Limited  Liability  Companies  " 77 

Under  the  Business  Act  generally 79 

Reorganization  after  foreclosure 81 

Railroads 83 

Plank-road  companies   87 

Proceedings  for  sale  of  real  property 83 

Changing  place  of  business 9° 

Under  the  Manufacturing  Act 9° 

Under  the  Business  Act 92 

Banks v. 92 

Change  of  name 93 

Insurance  companies 96  . 

Changing  number  of  directors 96 

Under  the  Manufacturing  Act 9° 

Under  the  Business  Act 97 

Insurance  companies 98 

Title-Guarantee  companies 98 

Practice.     See  Legal  Actions  and  Proceedings. 

Preferred  Stock :  Right  to  issue,  not  implied 102 

May  issue,  if  provided  for  in  by-laws 102 

.  May  not  afterwards  without  consent  of  all  stockholders 104 

May  be  exchanged  for  common 104 

Printing  and  Publishing  Companies:  Organization  of 2 

Proceedings  for  the  Sale  of  Corporate  Real  Property 8S 

Property :  Stock  may  be  issued  for,  at  fair  valuation 100 

Under  the  Manufacturing  Act 101 

Under  the  Business  Act 101 

Title-guarantee  companies I02 

Action  for  sequestration  of 29* 

See  Dissolution. 

When  to  vest  in  receiver 3°4 

Provisional  Remedies.     See   Attachments  ;    Injunctions  ;    Receivers  ; 

Legal  Actions  and  Proceedings. 
Proxy  :  Right  to  vote  on.     See  Elections. 

Railroad  Companies 29 

Method  of  organ  ization 29 

Certificate,  what  to  set  forth 29 

Amount  of  capital 29 

Stock  personal  property I28 

Residences  of  directors  to  be  stated 3° 

Articles  of  association  to  be  signed  by  subscribers. 3° 

Ten  per  cent  to  be  paid  in  on  subscriptions 3° 

Affidavit  to  be  annexed  to  certificate 3° 

When  to  become  body  corporate 3° 

Number  of  directors 3° 

May  not  purchase  stock  of  other  companies 55 

Except  union  railway  depot  companies 55 


428  INDEX. 

Railroad  Companies. — Continued.  PAGE 

May  declare  forfeiture  of  stock 128 

Consolidation 74 

Amount  of  capital  stock  of  new  company 74 

Agreement  to  be  submitted  to  stockholders 75 

Meeting  to  be  called 75 

May  reorganize  after  foreclosure.     See  Reorganization 83 

May  increase  amount  of  capital  stock 117,  118 

'    Stockholders,  liability  of,  until  capital  paid  in. 212 

Liable  for  debts  due  to  laborers,  etc 212 

Nature  of  the  liability 229 

Conditions  of  enforcing  same. 213 

Tax  on  franchise 273 

Penalties  for  non-payment 275 

Railroads  in  Foreign  Countries 31 

Number  of  corporators 31 

Purposes  for  which  companies  may  be  organized 31 

Method  of  organization •  •  •  •     31 

What  certificate  must  state 31 

Residences  of  directors  to  be  stated 31 

Subscribers  must  sign  articles  of  association 32 

Articles  of  association  to  be  approved  by  the  Governor 32 

Ten  per  cent  of  subscriptions  to  be  paid  in 32 

Must  maintain  principal  office  within  the  state 32 

Annual  meetings  must  be  within  the  state 33 

Directors  may  make  by-laws • 5$ 

Railroad-Supply  Companies 4* 

Number  of  corporators •  •  •     41 

Method  of  organization 33 

May  lay  tracks  not  exceeding  one  mile  in  length  [Note  3] 41 

Railways  :  In  counties  of  the  state  [Note] 29 

Commissioners  may  lay  out  [Note] 29 

Raising  Vessels  :  Organization  of  companies  for 3 

Real  Estate:  Right  to  hold 53 

In  other  states  or  countries 53 

Adjacent  lands 54 

Proceedings  for  sale  of SS 

Where  taxable 259 

What  included  in,  for  the  purposes  of  taxation 260 

Real-Estate  Business  :  Organization  of  companies  for 3 

Receivers  :  When  can  be  appointed •  •   254 

When  notice  must  be  given  to  officer  of  the  corporation 255 

When  receiver  of  life-insurance  company  will  not  be  appointed 255 

Where  application  for,  must  be  made 255 

Does  not  apply  to  receivers  on  foreclosure 256 

Copies  of  papers  must  be  served  upon  the  attorney-general 257 

When  appointed  upon  voluntary  dissolution 2S4,  303 

Officer  or  stockholder  may  be  appointed 3°° 


INDEX. 


429 


Receivers. — Continued.  PAGE 

In  voluntary  dissolution  must  give  notice  of  appointment 307 

Persons  must  account  to  receiver  for  property 307 

Provisions  of  law  in  respect  to  insolvent  debtors  apply  to 308 

Must  call  a  meeting  of  the  stockholders 308 

Property  must  be  distributed 30g 

Method  of  distribution 3Qq 

Must  account  to  the  court 30q 

Powers  of g 

When  may  collect  unpaid  instalments  of  stock 220 

Cannot  enforce  liability  of  officers  for  making  fraudulent  dividends  162 

Or  for  making  loans  to  stockholders j(^ 

Cannot  enforce  liability  of  stockholders  until  capital  is  paid  in.  .  .  .   223 
When  appointed  upon  proceedings  for  involuntary  dissolution  2S9,  303 

In  action  for  sequestration  of  property 291,  303 

In  action  to  annul  corporation 208,  303 

In  action  to  wind  up  a  corporation 302)  303 

In  action  to  preserve  the  assets  of  a  corporation 303 

In  action  to  foreclose  a  mortgage  upon  the  property  of  a  cor- 
poration     303 

When  to  report  quarterly 3II 

Accounts  and  statements  to  be  open  to  inspection 3i2 

May  be  removed  by  the  court oI2 

When  property  to  vest  in „Q. 

Except  in  case  of  insurance  companies 504 

In  case  of  life-insurance  companies 3o5 

Attorney-general  may  apply  for  removal  of 3o6 

In  case  of  fire  and  inland  navigation  insurance  companies 315 

Must  report  to  the  insurance  department 315 

And  to  the  attorney-general 3I6 

Insurance  companies  generally   ~I5 

Must  report  to  the  Insurance  Department 315,  3t6 

And  to  the  attorney-general 3I6 

To  the  court 3I(, 

In  case  of  banks  and  trust  companies 3i6 

Must  report  to  the  Banking  Department 3i6 

And  to  the  attorney -general.  ...    3i6 

To  the  court '. 3I^ 

In  case  of  railroads ^ X5 

Must  report  to  the  court 3I0 

And  to  the  attorney-general 3I0 

Compensation  of , 3I7 

Does  not  apply  to  receivers  appointed  in  action  to  foreclose  a 

mortgage 3I? 

Wages  of  operatives,  preferred  claims  upon 3IS 

Who  are  included  in  the  class 3iS 

Reducing  Capital  Stock.     See  Capital  Stock. 


430  INDEX. 

PAGE 

Reorganization.     Certain  companies  may  reorganize 77 

Full-liability  companies    may  reorganize    as    limited-liability  com- 
panies     77 

Under  the  Business  Act 79 

After  foreclosure 81 

Manufacturing  companies  after  sale  [Note  1]    83 

Railroads 83 

Plank-road  companies 87 

Increase  of  capital  stock  in  case  of 118 

Reports 130 

Under  the  Manufacturing  Act 130 

Under  the  Business  Act 136 

Marine-insurance  companies 137 

Fire  and  inland-navigation  insnrance  companies 138 

Life,  health,  and  casualty  insurance  companies 139 

Guaranty  companies 140 

Banks   141 

Safe -deposit  companies 143 

Trust  companies 143 

Railroad  companies 144 

Bridge  companies 144 

Ferry  companies 145 

Guano  companies ...  146 

Inland-navigation  companies 146 

Park  associations <. 147 

Pipe-line  companies 147 

Turnpike  and  plank-road  companies < 149 

Certain  moneyed  corporations 149 

When  required  of  receivers 310 

See  Dissolution. 

Rinks  :  Organization  of  companies  for  erecting,  etc 4 

Residences  :  Organization  of  companies  for  purchasing,  acquiring,  etc.  4 

Resignation  :  What  is  sufficient  to  constitute  [Note  3] 168 

Rights  of  Stockholders 188 

To  certificate  of  stock 188 

I  n  case  of  loss 1 88 

Court  may  compel  issue  of  new  certificate 188 

Compelling  transfer 190 

Mandamus  will  not  lie  to  compel 190 

Dividends,  right  to 191 

Books,  right  to  examine 150,  192 

Penalty  for  refusal 192 

To  statement  of  company's  affairs 193 

Rights  at  elections 194 

Of  moneyed  corporations 195 

Of  business  corporations 198 

Of  title-guaranty  companies. 199 


INDEX.  431 

Rights  of  Stockholders.— Continued,  pace 

Rights  at  Elections  of  safe-deposit  companies 199 

Of  railroads 199 

Generally 201 

When  directors  wrongfully  hold  over 202 

When  they  neglect  to  adopt  by-laws  providing  for  elections 203 

Safe-Deposit  Companies 23 

Number  of  corporators 23 

Method  of  organization 23 

What  certificate  must  set  forth 23 

Amount  of  capital 24 

May  be  increased \ 117 

When  may  commence  business 24 

Directors  may  make  by-laws 5S 

May  declare  forfeiture  of  shares 12S 

Shares  of,  personal  property 129 

Must  make  semi-annual  reports 143 

Stockholders  liable  to  an  amount  equal  to  stock  held 211 

Sale  of  Corporate  Real  Property  :  Proceedings  for 8S 

Petition  to  be  presented  to  the  court SS 

What  must  set  forth 88 

To  be  verified 89 

Persons  interested  may  appear  in  the  hearing 90 

If  corporation,  insolvent  creditors  must  be  notified 90 

See  Appendix  E 3S5 

Salvage  :  Organization  of  companies  for 4 

Seal :  May  be  by  impression  directly  on  paper 53 

May  adopt  any  form  of ....  53 

Service  of  Summons  :  How  made  upon  domestic  corporations 239 

How  upon  foreign  corporations   239 

Officer  of,  need  not  be  here  in  official  capacity 240 

In  justices'  courts 241 

Upon  railroad  companies 241 

Upon  express  companies 242 

Service  by  publication 242 

On  a  domestic  corporation 242 

On  a  foreign  corporation 242 

Shares  of  Stock  :  No  hen  can  be  created  on,  by  company  unless  ex- 
pressly authorized 124 

Cannot  be  declared  forfeited  unless  authorized 124 

Owner  generally  not  taxed  for 265 

Exception  in  the  case  of  banks 265 

How  such  shares  assessed 265 

Skating-Park  and  Sporting-Ground  Companies 3S 

Number  of  corporators 3S 

Method  of  organization 33 

Duration  of  company 3S 

Certificate  must  be  signed  by  the  subscribers 3S 


432  INDEX. 

Skating-Park  and  Sporting-Ground  Companies. — Continued.  page 

When  certificate  can  be  filed 3§ 

Number  of  directors 3§ 

Must  make  annual  reports M7 

Contents  of  the  reports 147 

Directors  liable  when  debts  exceed  the  capital 179 

Stockholders  liable  till  capital  is  paid  in 217 

Nature  of  the  liability 222 

Slaughtering  Animals  :  Organization  of  companies  for 3 

Special  Proceedings  :  For  voluntary  dissolution  of  a  corporation  ....  281 
See  Dissolution;  Legal  Actions  and  Proceedings. 

Stage-Coach  Companies 39 

Number  of  corporators 39 

Act  does  not  apply  to  the  City  of  New  York. 39 

Method  of  organization 33 

Route  to  be  stated  in  certificate 39 

When  certificate  may  be  filed 39 

Number  of  directors 39 

May  change  amount  of  capital  stock 105,  108,  122 

Stockholders  liable  for  all  debts 217 

Not  until  judgment  against  company 217 

Statements  Required  ;  for  purposes  of  taxation 264 

See  Taxation. 
State  Taxation.      See  Taxation. 
Statute   of  Limitations  :   Three   years'  limitation  on  action  against 

director  to  enforce  liability 17° 

When  it  begins  to  run  against  a  stockholder 223 

Foreign  corporations  cannot  plead   246 

Exception  in  action  for  causing  death 246 

Moneyed  corporations  cannot  plead  in  action  on  note 246 

Steam  :  Organization  of  companies  for  supplying,  etc 3 

Stock  :  Right  to  hold 54 

Restrictions  on 54.  55.  5° 

No  implied  right  to  subscribe  to  [Note  2] 54 

Manufacturing  companies . .  , 54 

Insurance  and  guaranty  companies 55 

Railroads 55 

Pipe-line  companies 55 

Stockholders:  Assent  of,  required  to  mortgage 65 

Provision  for  the  benefit  of  the  stockholders 66 

Loans  to,  prohibited 163 

Generally  not  taxed  on  shares  of  stock 265 

Exception  in  cases  of  banks 265 

May  be  made  parties  to  an  action  for  dissolution  or  sequestration  of 

property 292 

When  not  excused  from  answering   questions 298 

Liabilities  of.      See  Liabilities  of  Stockholders. 
Rights  of.      See  Rights  of  Stockholders. 


INDEX.  433 

PACE 

Storms  :  Companies  to  insure  against  [Note  2] 14 

Supervision  :  Action  for  judicial 294 

See  Dissolution. 
Subpoena.     See  Legal  Actions  and  Proceedings. 

Supreme  Court:  Jurisdiction  of 235 

Suspension  of  Business:    When  corporation  may  be  dissolved  for. .  .  288 
Suits  by  and    against    Corporations.      See  Legal  Actions  and   Pro- 
ceedings. 
Summons,  Service  of.      See  Service  of  Summons. 

Superior  City  Courts:    List  of 235 

Jurisdiction  of   235 

Limitations  on  jurisdiction 238 

Superior  Court  of  Buffalo:     Jurisdiction  of 237 

Taxation 259 

Certain  corporations  exempt  from  [Note  1] 259 

Municipal  taxation 259 

Real  estate,  how  assessed 259 

What  included  in 260 

Personal  property  where  assessed 260 

What  included  in 260 

How  value  of,  arrived  at 261 

Franchises  a  proper  subject  of  estimation 263 

How  indebtedness  to  be  considered 263 

Property  out  of  the  state  may  be  taxed .  .    264 

When  real  estate  situated  out  of  the  state 263 

When  building  on  leased  land 264 

Officers  of  moneyed  corporations  to  make  estimates 264 

What  to  be  included  in 264 

Foreign  corporations,  taxes  on  property  in  the  state 265 

Shares  of  stock  not  taxable •. 265 

Applies  to  foreign  corporations 265 

Exception  in  case  of  banks ...  265 

State  taxation 266 

Tax  on  franchise 266 

Does  not  affect  local  taxation 267 

Companies  subject  to  the  tax 267 

How  value  of  franchises  determined    269 

Reports  to  be  made 269 

Penalties  for  neglect  to  report  or  to  pay  taxation   270 

Construction  of  the  act 270 

Manufacturing  companies  exempt 270 

But  not  because  organized  under  the  Manufacturing  Act.  .  271 

What  constitutes  doing  business  in  the  state 271 

Insurance  companies  subject  to  the  taxation 272 

Railway,  express,  and  telegraph  companies 273 

Penalties  in  case  such  companies  neglect  or  refuse  to  pay  tax..  275 

Comptroller  may  examine  witnesses,  etc 276 


434 


INDEX. 


Taxation.— Continued.  PAGE 

Tax  on  Franchise.     Decision  of  Comptroller,  how  reviewed 277 

In  case  of  fire  and  marine  insurance  companies 278 

In  case  of  banks 279 

See  Organization  Tax. 

Telegraph    Companies 35 

Any  number  of  corporators 35 

Method  of  organization 33 

Certificate  to  be  signed  by  the  shareholders 35 

Consolidation  of 7° 

Consent  of  stockholders  necessary 7° 

May  increase  capital  stock 122 

No  personal  liability  of  stockholders 218 

Tax  on  franchise 273 

Penalties  for  non-payment 275 

Telephone  Companies:     Tax  on  franchise 273 

Penalties  for  non-payment 275 

Title-Guarantee  Companies. . .  , l8 

Method  of  organization. l8 

Number  of  corporators l8 

Certificate,  what  must  set  forth  T& 

When  meeting  of  subscribers  must  be  called 19 

Number  and  qualification  of  directors   T9 

Number  of,   may  be  changed 9$ 

Officers  must  be  elected  from  directors   57 

Must  be  president,  secretary,  treasurer,  and  general  manager. .      57 

When  by-laws  amended,  copy  must  be  filed 59 

May  change  amount  of  capital  stock 105,  108,  114 

May  declare  forfeiture  of  stock I27 

Certificate  of  stock  must  be  issued   I27 

Stock  not  to  be  transferred  when  stockholder  indebted 128 

Stock-books  to  be  kept I5I 

To  be  subject  to  inspection  of  stockholders 151 

Books  of  account  to  be  kept I5I 

To  be  subject  to  inspection  of  stockholders I5T»  *93 

Must  make  annual  report  in  January 140 

Contents  of  report I4° 

Must  deposit  same  in  office  of  insurance  department 140 

Towing  :  Organization  of  companies  for 3 

Tramway  Companies 43 

Number  of  corporators 43 

Method  of  organization 33 

Certificate  must  be  signed  by  subscribers   •  •     43 

Additional  particulars  to  be  stated  in  certificate 43 

Number  of  directors ■ 43 

Such  companies  may  condemn  land  [Note] 43 

Not  obliged  to  commence  business  within  one  year 44 

Trial  :    Preparation  for.     See  Legal  Actions  and  Proceedings. 


INDEX.  435 

PAGE 

Trust  Companies 24 

Number  of  corporators 24 

Method  of  organization 24 

What  certificate  must  set  forth 24 

Notice  of  intention  to  be  published '. 25 

What  notice  must  specify 25 

Superintendent    of   banking  department    to    determine  the  neces- 
sity of 25 

When  may  commence  business 27 

Number  of  trustees 27 

To  be  divided  into  classes 27 

When  term  to  expire 27 

Amount  of  capital 28 

Powers  of 28 

Trustees  may  make  by-laws 58 

Must  make  semi-annual  reports 143 

When  trustees  are  liable 180 

Stockholders  liable  to  an  amount  equal  to  stock  held 211 

Turnpike  and  Plankroad  Companies.     (See  Plank-road   and   Turn- 
pike Companies.) 

Unpaid  Stock.     See  Liability  of  Stockholders. 

Usury:     Corporation  cannot  plead 245 

Value  of  Property:     How  arrived  at  for  purposes  of  taxation 261 

See  Taxation. 

Value  of  Stock:     Method   of   determining   for   purposes   of   tax   on 

franchises 269 

Verification  of  Pleadings.     See  Pleadings. 

Vessels  :  Organization  of  Companies  for  raising,  etc   3 

Voluntary  Dissolution.      See  Dissolution. 

Wages  of  Operatives,  etc.:  To  be  paid  weekly  [Note  2] 231 

Must  be  paid  in  cash  [Note  2] 231 

Preferred  in  case  of  insolvency 318 

Warehouses  :  Organization  of  companies  for  constructing,  etc 5 

Water  Companies  :  Organization   of  companies   for  supplying  water 

for  mining,  for  power,  etc 5 

Water-works  Companies 40 

Number  of  corporators 40 

Application  to  be  presented  to  town  authorities 40 

What  such  application  must  contain 40 

Method  of  organization 33 

Additional   particulars. to  be  stated  in  certificate 41 

May  lay  pipes  in  highways 41 

May  acquire  and  condemn  land  [Note  1] 41 

Act  does  not  apply  to  Kings  County,  ibid 41 

May  increase  capital  stock 122 

Winding  up  Dissolved  Corporations. 

When  attorney-general  must  bring  action  for 301 

Yonkers  City  Court.     See  City  Court  of  Yonkers. 


• 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 
I  III:        I  i   ■   ,i  III 


AA    000  695  175    0 


:y[ 


m 


m 


